At the start of Financial Capability week https://www.fincap.org.uk/fincapweek this latest research from the CIPD shows that there are still many organisations that don't incorporate a financial wellbeing strategy.
This may be just a timing lag as financial wellbeing, although not a new concept, has become a more pressing priority in recent years following the pension freedoms, the abolition of the default retirement age, the advent of defined contribution pensions, increasing longevity, stagnant wage levels and difficult economic conditions.
But businesses ignore financial wellbeing at their peril. In research carried out in conjunction with the CIPD earlier this year (https://www.cipd.co.uk/Images/financial-well-being-why-its-important-report_tcm18-17441.pdf) poor financial wellbeing was shown not only to have a negative affect on the individual but also on the business, impacting employee engagement, absence rates, concentration and decision making and ultimately productivity.
Starting a financial wellbeing programme doesn't need to be complex or daunting. Every journey starts with a first step.
We recommend that the first step in implementing a financial wellbeing programme is to ensure that the key risks are addressed, then move onto the areas of biggest impact.
The key risks are:
- Ensure employees who are approaching and at retirement are supported so they make the right decisions regarding their pension
- Help any employee who is considering transferring their defined benefit pension to seek suitable advice
- Provide support to those impacted by annual and lifetime pension tax allowances. Those affected by annual allowance limits are likely to need to keep on saving for retirement. Think how you are helping them to find suitable savings products now they can't save into a pension
- Signpost help for those who have unmanageable debt
Once these areas are underway, then the areas of greatest impact are to ensure new joiners are provided with financial education on joining. Not only will this introduce them to their pension and benefits but it will help to establish good financial planning habits from the outset and so every decision from then on will be the better for it.
Financial wellbeing is a win-win; it benefits individual employees and it also benefits businesses bottom lines.
Employee financial well-being: aligning reward with people strategy By Charles Cotton, CIPD Senior Adviser for Performance and Reward The 13th of November marks the start of Financial Capability Week, the purpose of which is to celebrate, showcase and amplify existing financial capability initiatives and ultimately improve financial well-being. To mark this, the CIPD has polled HR professionals to ask if employee financial well-being is part of their organisation’s people management strategy. Among the 313 who have responded, most (64%) say that it is not. By comparison, just a fifth 20% say that it is part of their people strategy, with a further 8% saying that there are plans to incorporate it.