Context

Earlier research by Close Brothers revealed that money worries affected the ability of one-in-four workers to do their job fully. One-in-ten said that they found it hard to concentrate or make decisions due to money worries, while almost one-in-five (19%) had lost sleep over the same issues, resulting in stress and absenteeism. Recent changes in government regulation over pensions have indicated that the Government see the workplace as a suitable setting for financial guidance, advice and education; while employers are in an ideal position to influence large numbers of people within the UK. While employees should benefit from the extra support that employers can provide, employers should also see benefits as they build a happier and more financially robust workforce, significantly increasing productivity.

The study

This 2017 report from Close Brothers provides insight into savings behaviour among UK employees, and suggests financial education is a vital way for employers to help their employees increase their financial wellbeing. This research establishes the role employers are currently taking, and highlights potential areas for improvement. It poses important questions about the role of employers in assisting employees in becoming increasingly well-prepared financially for both their work lives and subsequent retirement.

Most of the data in the report is based on surveys conducted among 1,000 employers with 200 or more employees, and 2,009 employees from the same scale companies. Opinium carried out the research on behalf of Close Brothers in August 2017.

Key findings

The report’s key findings are divided into three main sections, as below:

• • The report states there is a ‘clear savings crisis’ among employees, with a third (33%) saving less than £50 a month, including 20% who save nothing at all.
  • Only 40% of employees are confident in their ability to choose the correct financial product.
  • hose aged 18-34 save more on average than their older counterparts.
  • Women are saving less than men into non-pension savings (£221 compared to £305), while the average size of their workplace pension schemes are less than half their male counterparts (£53,000 compared to £120,000).
• • Financial education is becoming more widespread, with almost half (48%) of UK employers already offering some form of financial education, with a further 20% planning to offer it within the next 12 months.
  • However, only a third (32%) of employers believe it is their responsibility to help their employees’ access advice on how to achieve savings goals.
  • Three-quarters (75%) of employees stated that their employers had not provided any financial education to help them understand their savings choices, though of those that had received some financial education 35% said it had been useful in guiding their savings decisions.
• • Almost three-fifths (59%) of employees trust what their employer says about their workplace pension and other savings tools.
  • =The channel of advice must provide optimal impact, with almost two-thirds (63%) of employers stating that face-to-face guidance is the most effective, substantiated by 57% of employees agreeing that face-to-face is the best format for guidance.
  • Requirements for financial education vary enormously by age and other demographics, and successful financial education programmes need to recognise this and tailor their guidance effectively.The report concludes that urgent action is needed to help employees improve their financial wellbeing, to avoid a ‘wealth crisis’ in the near future.

Points to consider

• Much of this research is based on surveys carried out in 2017, but there are no details given about the sampling strategy or methods of data collection. Caution must therefore be exercised when considering the key findings.
• This report is relevant to all stakeholders, policymakers and particularly employers with an interest in employer financial education and the role of employers in helping employees improve their financial wellbeing.
• The research is applicable to the United Kingdom, with research conducted in England, Scotland, Wales and Northern Ireland. However as there are very few details regarding the methodology, caution is needed when generalising from these results.

Full report

Lifetime savings challenge 2017 - full report