How responsible are companies for employee’s financial wellbeing?
It is a fact that most of the working population receive little or no financial education from their employers – and I believe business owners and their HR functions can shine by stepping in to fill this gap in 2019.
Debt is crippling. It clogs us up. It hinders us. It weighs us down. It enslaves us and it makes us unable to manoeuvre, often leading to mental health issues.
Employers have a moral responsibility to look after the financial wellbeing of their employees and to ensure they are at least financially literate.
In my view, if people are better at managing their own money, they will also be better at managing company resources and will endure less stress in the workplace, which certainly impacts their ability to perform.
This is clearly good citizenship, but it is good business sense too. Financial education is as an employee benefit that assists with retention. Help with pension planning will aid the transition to retirement among older employees and improve succession planning by providing further options for younger staff.
If businesses care for their employees, I believe people will be able to give them more in return. Basic courses in budgeting and debt reduction, in addition to retirement planning, can be a great start.
Of course, financial education should not be a substitute for paying people a decent wage and it’s important not to examine it in isolation from your pay policy. But with the rollout of auto-enrolment pensions in particular, all employers have a responsibility to offer access to schemes. With this should come guidance on the schemes and on the need for employees to augment their state pensions.
What is being done?
Supplementing pension provision with workplace savings schemes is a logical further development to consider. And the process of providing guidance on pensions and savings feeds through to other aspects of financial education. Assessing how much income is needed in retirement requires budgeting skills and an understanding of taxation. In effect, pension guidance is a stepping stone to wider financial education.
Although some employers do not have the resources and skills to provide financial education, there are freely available services to help provide support. The Money Advice Service provides simple and easy-to-use online financial tool, for example.
Teaching employees about money has to be good for business – and for that reason, HR should get more involved in 2019. If your employees can better manage the money they make, those extra savings will provide a bump to their bottom line. You’ll be giving them useful life skills they can apply beyond your company. And hopefully, they will put plans in place that will reduce their money-induced stress. By giving your employees tools precious few others have today, they can teach their spouses, children and friends sound financial skills – which means you are helping society and the country by educating people in a necessary but under-taught set of life skills.