Employers in the U.K. are taking an interest in helping their employees plan their financial futures, reveals a survey conducted by Watson Wyatt.
The survey found that 73% of large U.K. employers want to offer financial education and planning assistance to their staff.
Fifty-eight percent of employers reported having concerns that many of their employees may not have adequate retirement income if they are not encouraged to make better financial choices. This finding is supported by a parallel survey of employees, 85% of whom said that within the next 15 years, pensions alone would be inadequate to fund their retirement and will have to look alternative ways to save.
According to Watson Wyatt, employers recognize that people today have complex financial lives and they are looking to tailor employee benefits packages to reflect that. The survey found that 63% of employers believe that in the next 15 years they will offer employees a wider range of savings and investment options.
“While many companies care for the welfare of their staff, this growing interest in providing personal financial planning is not old-fashioned paternalism,” says Gary Smith, a senior consultant at Watson Wyatt. “For example, if significant numbers of people cannot afford to retire because of poor financial planning, this is likely to create significant workforce management problems in terms of productivity, succession planning and talent management.”
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Workers Worldwide not Saving Enough for Retirement
Although people have concerns about not having enough money to maintain their current lifestyle in retirement, or outliving their retirement savings completely, many full-time workers in developing and mature countries haven’t done much to alleviate the problem.
According to two MetLife surveys, the inaugural Study of International Employee Benefits Trends (iEBTS), and the sixth annual U.S. Study of Employee Benefits Trends (EBTS) ), 81% of Mexican employees, 80% of Indian employees, 58% of Australian employees and 31% of U.K. employees have done no retirement planning independent of mandatory government plans. In addition, 46% of U.S. employees have not taken steps to determine income need in retirement.
Many of the employees surveyed know the importance of retirement benefits and are interested in receiving financial and retirement planning products through their employer. In fact, 48% of Indian employees whose employers do not offer retirement benefits said they would be interested in purchasing retirement planning products through their employer, even if they had to pay 100% of the cost. Additionally, 66% of Mexican employees and 49% of U.S. employees said they are interested financial advice regarding planning for retirement.
“Employers have a huge opportunity to differentiate themselves by filling a great void in the retirement planning needs of their employees,” says William J. Toppeta, president of MetLife International. “The study shows that employees are receptive to receiving financial solutions in the workplace. Such a move would also enable employers to attract and retain their most talented employees at a time when the competition for talent is intensifying globally. This could create a win-win situation for employees and employers.”
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Workers Undervalue Benefits
New research shows that 98% of British workers underestimate the amount that employers spend on benefits.
The survey, done by Aon Consulting, polled 1,300 working adults. When asked how much they think their company spends on their benefits as a percentage of their individual salary, over 69% said they thought it was no more than 10%. Almost half (46%) of those polled believed that 5% or less of their pay was put towards their benefits and 23% put the figure between 6% and 10%.
“There is a large gap between perception and reality. The research shows clearly that people do not understand the true costs of their perks,” says Gareth Ashley-Jones, head of flexible benefits at Aon Consulting. “The findings are a blow for companies who have invested a great deal of resources into offering attractive benefits packages. If they are to be genuinely valued by staff, then they need to understand the scale of investment being made on their behalf.”