It’s the same old story, employees are not saving enough for retirement—and that’s simply because of their lack of financial literacy.
A 2013 Canadian Payroll Association survey indicated that 42% of employees would have difficulty meeting their financial obligations if they paycheque was delayed by one week.
And it doesn’t matter if their salary increases, said Stacey He, who runs a financial planning practice, at an Employee Assistance Program Association of Toronto on Wednesday. Many employees don’t know the basics; they don’t understand a budget, she continued.
And these individuals bring these financial issues to the workplace. According to one survey, at any given time, 15% to 30% of the workforce is seriously financially distressed, she noted. And another survey indicates that financially distressed employees spend 13% of the workday dealing with their finances.
As a result, not only productivity wanes but health, too. Implications of debt stress can lead to health issues: 29% of those with financial distress have anxiety, 44% get migraines, and 23% have severe depression—higher percentages than those who are not financially distressed.
So what makes a good financial well-being program? A holistic approach to finances, not just simply information on retirement planning, she explained
She suggested seminars, lunch and learns, webinars, one-on-one coaching and internal Facebook sites (13.4 million Canadians are on Facebook), where employers can post information on financial topics.
Gamification is another route that companies are taking. Staples, for example, has used this initiative to engage its employees. The office supplies company discovered that employees were not participating in the company pension plan. But it wasn’t because the plan was complicated—employees were simply struggling to save, said He.
So the company got employees to participate in BiteClub—a vampire finance game that focuses on saving for retirement. This year, Staples had about 70% participating in the game and most of the employees are contributing to the plan.
For those plan sponsors that are not on the financial literacy bandwagon, she said it’s time to start. “At least start that discussion.”
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