Having a financial wellbeing strategy could go a long way to helping employees feel better about their finances. Not only that, it can have a positive impact on employers too.
People’s financial wellbeing appears to be at a low point, according to insights from our Retirement Voice 2022 report. Our research, which asked almost 6,000 people from across the UK on their views on retirement, revealed that many people are lacking in confidence and knowledge to make financial decisions, as well as cutting back on everyday spending as a result of rising costs.
People are also worrying that they’re not saving enough for retirement, a finding that’s mirrored by Phoenix Insights in their report Great Expectations: Are people’s retirement income expectations adequate and achievable?. As part of Phoenix Group, Standard Life has access to research like this through their Phoenix Insights think tank. Using financial modelling, Phoenix Insights suggest that many pension savers are falling short of meeting their financial goals. In fact, around 14 million people who save into a Defined Contribution (DC) pension scheme are not on track for the retirement income they expect.
So the question is: what does good financial wellbeing look like? And what can employers do to support staff with their financial wellbeing?
What does financial wellbeing mean?
Financial wellbeing means feeling secure and in control of your finances. It can cover many aspects, but primarily a person is likely to feel financially well if:
• They know how much money they have coming in and going out every month
• They’re meeting short-term commitments like their mortgage or rent and household bills
• They have a plan for the future, like saving into a pension
Financial wellbeing can impact people at work
Poor financial wellbeing doesn’t just affect people at home – if affects them at work too. In their report, Employee financial wellbeing: A practical guide, The Chartered Institute of Personnel and Development (CIPD) found that 28% of employees say money worries have affected their work performance, including their ability to concentrate and make decisions, whilst 29% say cost of living-related concerns have negatively impacted their productivity.
However, our research highlights that planning and seeking guidance play an important part in improving financial wellbeing. Those who spend time planning are more likely to feel:
• Positive about their financial situation
• Confident making financial decisions
• Comfortable in their understanding of financial products
As an employer, you can play a key role in helping staff improve their financial wellbeing. Not only will you be helping to support your employees, having a financial wellbeing strategy in place can have a positive impact on the wider business too. Here are a few reasons why.
3 ways a financial wellbeing strategy can benefit employers
Financial worries are a big source of stress, and can have a knock-on effect on employee attendance. According to The CIPD’s report, an average of 4.9 worker days are lost each year as a result of financial worries. In addition, financial-related absenteeism is costing large organisations an average of £323,390 a year.
By implementing financial wellbeing solutions – such as targeted support and guidance – you can help employees with any short- and medium-term financial challenges and pave the way for a more secure long-term future. This could help ease the stresses that can affect employees’ mental and physical health, and in turn reduce absenteeism.
Boosts employee performance
If employees are finding it hard to concentrate or make decisions because they’re feeling overwhelmed by financial worries – as the findings from The CIPD’s report revealed – then it’s likely to affect their performance and productivity at work.
Whether someone is struggling with debt, buying their first home, or approaching retirement and worried about their future finances, a financial wellbeing strategy can help them navigate through the challenges they’re facing. You can direct them to tailored content and tools that are relevant to their circumstances, helping to boost their understanding of the options available to them.
Being better informed can help reduce stress, improve financial confidence, and give employees the breathing space they need from financial worry to be more productive at work.
Improves staff retention and acquisition
Financial wellbeing is something that affects everyone at multiple life stages. And whether your employees are just starting out in their career or thinking about winding down for retirement, supporting them through life’s financial changes shows that you’re demonstrating a duty of care – which can have a big impact on your recruitment and retention efforts.
Indeed, research by PwC shows that over three-quarters of employees who are stressed about their finances would be attracted to another company that cares more about their financial wellbeing.
Financial wellbeing: the right thing to do by your employees
Ultimately, it’s important to remember that helping your employees and supporting them with financial wellbeing is a good thing to do. The best employers show a duty of care towards their staff. And staff that feel supported are more likely to be less stressed, more productive, and stay with the company for longer. With rising costs continuing to squeeze people’s finances, now is a good time to check that your financial wellbeing strategy delivers the support your staff need.