With the festive frivolities now behind us for another year, many employees will be thinking about new year resolutions, and getting on top of their finances is likely to feature prominently on that list.
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- Employers can offer a range of schemes to help meet employees’ short- and long-term savings objectives.
- Effective marketing of workplace savings schemes can generate interest and boost participation.
- Employees will appreciate the ability to analyse their whole financial portfolio.
Whether it’s short-term savings or putting more money aside for retirement, employers can help staff to meet their objectives, and there are five main areas to consider.
Paying into, or increasing contributions to, a pension scheme is likely to be a top priority for employees, and employers can help them with this by providing information on any existing workplace pension scheme or explaining how auto-enrolment will work.
Anthony Carty, group financial planning director at Clifton Wealth, says: “Employees need to see auto-enrolment as a positive step, and that’s all about the tone of presentation. Rather than setting up a scheme that starts at a 5% employee contribution, even if it’s matched by the employer, employees will be far more receptive to a scheme that matches up to 5% but starts at a minimum of 1%.”
Effective marketing of schemes can attract employees’ interest. Girish Menezes, a principal at Buck Consultants, suggests using case studies to show how regular savings can build up over time.
“Employers may also want to support this by launching a pensions modeller or mobile phone application to create some excitement around the communication campaign,” he says.
Financial education can help employees see where they need to focus their efforts. Peta Fry, director of HR at consultancy Monahans, says: “This doesn’t have to mean providing access to an independent financial adviser, but can be as simple as signposting free advice about money management that is available predominantly online.
“Working with employees to identify what their needs are and how they would prefer to access advice and information will help organisations ensure that what is provided is valued and taken up.”
Staff are also likely to be appreciate being given the ability to analyse their own financial situation. For instance, Lorica’s new Bigblue portal enables employees to view their entire portfolio, including workplace and personal finances.
Manesh Patel, senior flex consultant at Lorica Employee Benefits, says: “It will help employees to be more aware of their entire financial situation, from how much they owe on their credit cards to the current value of any properties they own.”
Providing access to a workplace individual savings account (Isa) can help employees fulfil their new year resolutions around putting aside a regular amount of money each month, and offer a tax-free way of doing so.
Henry Tapper, business development director at First Actuarial, says: “The Isa itself is selected by the employer and can be used not just to roll up tax-free cash, but also equities. For employees who want an alternative to pensions for medium-term savings or who are suspicious of the annuity and drawdown processes, workplace Isas are the next-stage product.”
Employee share schemes
For organisations that have an employee share scheme in place, or would consider setting one up, providing information about how share schemes work and their potential benefits will be of interest to some employees.
John Collison, head of employee share ownership at IFS Proshare, says: “Something like a sharesave or share incentive plan is the perfect way to educate staff about saving a regular amount of money and allows them to build up a stake in the organisation they work for. A lot of employers have done this to encourage both a savings and a share ownership ethic.”
Employers can also help staff make significant gains on existing savings by encouraging them to use salary sacrifice arrangements. Andy Philpott, sales and marketing director at Edenred, says pensions and childcare are the biggest opportunities here.
“The key is to take a step back, look at all the things that can be offered through salary sacrifice, and enhance the benefits proposition accordingly,” he says. “Doing this will provide savings for both employer and employee.”