New research highlights how financial wellbeing strategy is shifting to meet workforce demands.

25th September 2024

New research[1] launched today amongst 236 companies representing 1.3 million employees has uncovered insightful findings on current financial wellbeing provision, as well as foresight into future trends. The report from the Reward & Employee Benefits Association (REBA) in association with WEALTH at work highlights some of the barriers to improving financial wellbeing support, the current risks employees face, as well as the drivers of future change.

Barriers to improving financial wellbeing

Over three-quarters (76%) of employers think a barrier to improving financial wellbeing support in the workplace is employees not knowing where to start when asking for help.  Other barriers include support not being joined-up (72%), lack of communications (69%) and a lack of take up of existing financial wellbeing support (59%). Over two-fifths (41%) of employers say that a barrier is that existing support is unsuitable for employee needs.

Risks to employee financial wellbeing

The research found that employers expect financial pressures such as inflation (76%) as well as costs impacting working parents such as childcare (73%), rental costs (64%), carer costs including eldercare (46%), high interest rates on mortgages (58%) and high energy prices (58%) will continue to be a risk to the financial wellbeing of staff. In fact, 53% of employers say the increased cost of living will be a driver of change for future financial wellbeing support.

Other financial wellbeing risks high on the list for employers include insufficient retirement savings (71%) and a lack of financial literacy (62%).

Driving change

The survey found factors such as ESG affecting attitudes to savings (42%) and the ageing population (41%) are growing drivers of future change.  Whilst factors such as mental wellbeing (70%) and poor financial literacy (31%) remain key drivers for change.

Overall, the research revealed that the workplace recognises internal demands such as benchmarking against competitors (57%), building a sustainable and resilient workforce (56%), attracting talent (56%), retaining employees (55%), as well as the need to streamline financial wellbeing benefits (52%) as key drivers for future change.

Jonathan Watts-Lay, Director, WEALTH at work, comments; “It’s really important that employers check that financial wellbeing provision is suitable and effective for their workforce and that employees know how to access it. As people often struggle to manage their finances, they need support with their day-to-day needs. This help needs to be balanced around longer-term needs e.g. the provision of savings through Workplace ISAs, as well as pensions savings and preparing for retirement.”

He adds; “It’s also well known that when employees do not fully understand their finances and how to address current difficulties, it can result in stress. A lack of understanding of finances could also result in poor decision making which can prove very costly, especially at retirement. Helping employees to understand the key financial issues that relate to them is an effective way of overcoming the risks of poor financial literacy.”

The future of financial wellbeing provision

To combat these concerns, almost half of employers (49%) plan to make changes to their financial wellbeing offerings in the next two years.

In fact, the research found that over a third (35%) of employers say they plan to increase financial wellbeing spend, and 82% are set to offer financial wellbeing programmes within the next two years.

Specifically, employers plan to offer financial education from an independent provider (47%), financial coaching e.g. one-to-one guidance (43%), advice on general finances (47%), or advice specific to retirement (54%), as well as support with pre-retirement planning (60%).

Popular savings and benefits that will be offered by employers within the next couple of years include discount schemes (86%), travel season tickets (63%), debt support (41%), employee share plans (38%) and mortgage broking services (35%). The provision of tax-free saving wrappers including ISAs is set to more than double (from 14% to 30%).

Measuring financial wellbeing is also going to be key, with 73% of employers planning on measuring the effectiveness of their benefits in the future.

Jonathan Watts-Lay, Director, WEALTH at work, comments; “It’s good to see that many employers are now focused on helping employees by providing them with tools to better manage their money and support is growing for savings products to build financial resilience such as Workplace ISAs.”

He adds; “Financial education is the key element which underpins all financial wellbeing initiatives. After all, financial wellbeing is about being able to make informed choices about your finances, no matter what life event you may be experiencing. So, it’s good news that many will be putting financial wellbeing support in place in the near future to help with a range of needs. Offering a range of financial wellbeing benefits which are aligned in strategy should help employees feel financially secure whether they are a new parent managing childcare costs, saving for a first home, or planning for retirement. And ultimately, helping employees become more financially resilient is a win for employers too.”

Watts-Lay explains; “It’s positive to see that there will be an increased focus on measuring financial wellbeing effectiveness. Of course, measurement is a central part to any financial wellbeing programme as it’s really important to review data to understand its impact on broader HR and business objectives.”

Debi O’Donovan, director, REBA, comments; “Rethinking how we work, live, save and spend when our total earning lives are likely to span about sixty years calls into question why we focus almost single-mindedly on saving harder into pensions in order to completely retire before or in our sixties. Given that cliff-edge retirements are on their way out, effective workplace financial offerings therefore, are likely to shift too. This research demonstrates that major life events such as buying a house or becoming a parent are becoming increasingly acknowledged by employers, not least because of the way related money pressures distract from work or cause valued employees to leave.”

[1]The Financial Wellbeing Research 2024 was carried out by the Reward & Employee Benefits Association (REBA) in association with WEALTH at work and is the third in its series of workplace research. Responses were received from 236 wellbeing, HR and employee benefits specialists working at organisations representing over 1.3 million employees. A series of roundtables with senior reward, benefits and wellbeing directors, were also conducted which form the case studies in the report.