New guidance for employers on how to improve the financial awareness of their workers has been released by the Chartered Institute of Personnel and Development (CIPD).
The thrust here is to keep employees minds on the job as opposed to fretting their hours away at work worrying about money.
The CIPD guide that can be downloaded from HERE, calls for employers to offer their workforces financial education in the work place. This should then reduce the risks of ‘…stress and anxiety-related underperformance associated with employee debt…’ says the Institute.
There is also the matter of the upcoming workplace pension auto-enrolment, which employees should fully understand the implications of.
Charles Cotton, Reward Adviser at CIPD, said: “Employers may think that the financial savvyness of their employees is not their responsibility. But the impact of not providing financial education can mean a workforce pre-occupied or overwhelmed by their own financial worries, and unable to appreciate the value of their organisation’s pay, benefits and pensions package.
“A little financial education can go a long way. It can improve performance by giving employees the means to alleviate stress and pressure they’re under because of financial difficulties. It can help boost motivation and staff retention by helping employers to get across the value of the financial benefits they offer to their employees. And, by heightening general financial awareness, it can create a workforce that better appreciates the business pressures faced by their employers.”
Pensions expert and Director General if SAGA, Dr Ros Altmann has backed the call saying “Financial planning in the workplace can be hugely beneficial to help people manage their money. Many people have no idea about financial planning and investment – it is not taught in schools or universities and there is often confusing jargon that puts people off engaging with the issue.
“Older workers, in the years before they may decide to retire, need help to plan their future finances carefully and are often too frightened to engage properly with pensions and savings because it can be confusing or they fear they have not saved enough and prefer not to think about it. Younger people with large debts also need help in managing their money. The best place to deliver financial planning courses is likely to be at work, with groups of people together who can discuss issues with each other in a non-threatening environment and then perhaps have some one-to-one time with an adviser once they understand some of the basics.
“This approach to improving financial literacy in the UK could reap big benefits for workers and help people understand the reality of financial planning. People need to be equipped with the information and skills to make informed decisions for themselves, rather than having to rely on generic advice they often fail to understand.”
Employers should be incentivised to offer advice
“Employers should not be expected to educate their workforce on these issues, but those who are willing to offer financial planning courses as an employee benefit could perhaps be incentivised to do so. At the moment, there is very little tax relief given for employers to offer financial advice to their employees. I think the Government should increase the limit on the amount of advice per person that can be given. At the moment, the maximum that can be claimed for is Â£150 per person per year which would buy just a few minutes of an advisers' time.”
Crucial people are offered more retirement planning advice ahead of auto-enrolment
“As we are just about to automatically enrol millions of workers into company pension schemes for the first time, they need help to understand what is best for themselves. This should be a crucial part of the policy of auto-enrolment and increasing the tax relief limit on workplace financial advice could help kick-start the process. Â£150 a year is nowhere near enough to deliver the needed level of help.”