Supporting Financial Health in the Workplace

Employees who are struggling with worries outside of work, such as their personal finances and retirement planning challenges are not focused on their jobs. This means they could be disrupting the productivity of your business. But forward-thinking employers are implementing initiatives and new technology to support their employees' financial health and boost their bottom line.

Financial health in the UK is at a worryingly low level. The FCA’s Financial Lives Survey 2017 found high levels of vulnerability and low levels of confidence among the UK population. With 4.1 million failing to pay bills or credit commitments in three or more of the last six months, and only just over a third (35%) of those aged 45-54 having prepared for retirement.

Money worries are only made worse for the 46% of all UK adults who say they have limited financial knowledge. Meanwhile only 40% have confidence in the financial services industry; the very sector that should be equipped to resolve these problems.

And even where employees are making the right moves such as saving into a defined contribution scheme they are not engaged with the plan. Most worryingly they are unaware of how much they are putting in or in what way they are drawing their savings out (see below).

Alarming pension findings from the FCA

  • Two million UK adults say they have a defined contribution (DC) pension, have received and read their annual statement in the last year, and did not understand it very well or at all1.
  • Nearly half a million (400,000) UK adults have accessed a DC pension in the last two years and admit to not understanding their access options at all or even that options exist1.
  • A quarter of those who accessed a DC pension in the last two years are not able to say how they did so, i.e. whether they purchased an annuity or accessed their pension pot in another way1.

Time to Act

Perhaps the FCA’s findings are not that surprising. We know the UK is an indebted nation and that low interest rates and rising inflation are doing little to help the problem.

Yet it is time to act and employers are uniquely placed to help their employees deal with money troubles. Often individuals may want to take action but lack the tools, encouragement or incentive to do so.

New research from Mercer on financial security in the UK indicates that more than 82% trust their current employer when it comes to financial services guidance, compared with just under half (49%) who say the same about their personal financial advisor2.

A growing number of employers also have access to the latest technology which can help employees take immediate action to improve their financial circumstances. The digital world is fast becoming the preferred means of communicating money matters and encouraging people to act; our new research found 90% of under 40s are interested in online financial tools to help manage their finances.

Of course, when businesses are strapped for cash with their own financial challenges, investing more in supporting employees may seem counter intuitive. But today’s successful employers understand their people are the business rather than simply part of it. What's more, implementing effective financial wellness benefits and tools to help people manage money are usually very cost-effective.

The view that employees are nothing more than an asset does not cut it anymore. People are, in fact, investors: they choose to invest their time, energy and talent with your company. You can no longer rely on chance or what you have done in the past, as this will not get you close to accessing the workforce needed to ensure business success. It is also in an employer’s interest to ensure the workforce is happy and therefore productive.

Mercer's own research suggests absenteeism and presenteeism, where employees are at work but not focused on the job in hand, costs as much as £57bn per year. At a time when UK productivity is getting worse when compared with other G7 countries, employers can help alleviate financial stress at work and improve the bottom line.

More than Education

Financial education is often seen as the most effective route to engaging employees with budgeting, saving and investing, yet today’s workers are subject to a deluge of information. They are time poor and their attention has become a stretched resource.

Traditional approaches appear to have failed to capture employees' attention - with only 19% of workers happy with current communication strategies.

Instead employers are now starting to invest in financial wellness programmes which offer a more holistic approach to employee benefits. These include multi-media communication strategies encompassing: digital support; group workshops;, individual clinics; and even financial advisor links.

Using employee surveys and data, employers can build an effective communications strategy that both personalises the message and reaches employees at the most relevant times.

Critically, communication must allow employees to take positive action – be that contributing more to a pension plan or taking steps to manage debt.

Money worries are not an individual problem; they affect all areas of society. Employers have an important role to play in supporting their employees and encouraging positive behaviour which can benefit both the workforce and the business itself.

Three key actions for employers to improve financial health

  1. Review the existing communication and benefits arrangement and measure the return on investment.
  2. Consider using digital financial wellness communications tools that not only allow employees to understand their choices, but also to act easily and conveniently, avoiding the common gap between intent and action.
  3. Make sure any communications allow the employee to take immediate positive action.

For more information on how to engage employees and improve financial wellbeing visit our Financial Education section.



1. FCA’s Financial Lives Survey 2017

2. The new Mercer Financial Security Study examined the issue of financial security for individuals and employees from both business and consumer perspectives to uncover insights regarding employer, employee and consumer behaviors, and their beliefs and perceptions around financial security across wealth, health and careers.
The study was sponsored by Mercer and produced by independent marketing research firm Reputation Leaders. It consisted of in-depth interviews with industry experts across countries and sectors and of a survey of both individuals and senior decision-makers in government and the private sector.

This article first appeared on uk.mercer.com/our-thinking


Author information

Eve Read, Head of Proposition for UK DC & Financial Wellness, Mercer
Mercer and Jelf are both part of Marsh & McLennan, a global network of experts in risk, strategy and people.