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APRIL 2011 Financial education SUPPLEMENT 03 Cost-efficient ways to get the message across 06 Could RDR hit the provision of education? 11 Advantages of giving staff financial nous 12 Using interactive tools to spark staff interest SPONSOR’S COMMENT Employees need guidance to rethink their retirement plans The changing pension and retirement landscape maximising the opportunity to increase their means employees now have a number of options retirement income. to consider. They save for many years into Employees need to understand the wealth creation pension plans and other forms of investment to opportunities available to them by virtue of their fund their retirement income, but they are often employment and how these may be combined to left without any guidance when they need to provide significant benefits. For example, many make what may be the biggest financial decision employees now have access to a variety of workplace of their lives. savings plans, such as a workplace individual savings With legislative changes such as the removal of the account (Isa), share schemes and pensions, including a default retirement age and greater flexibility in how workplace self-invested personal pension (Sipp). pension benefits are taken, employees need to rethink Such variety allows employees to choose a savings their retirement plans. vehicle or combination of vehicles that are the most These changes require new learning and can appropriate for them at a given point in time to satisfy Legislative changes therefore create uncertainty for many employees. This their personal short-, medium- or long-term savings have increased the is encouraging more employers to provide financial goals. So, employees who want to build up their retirement income education in the workplace to help staff understand retirement pot may benefit from linking share schemes the key facts so they may make informed choices with a workplace Sipp. An employee participating in a options for staff, about their financial future. share incentive plan (Sip) can transfer shares in specie says Jonathan It is also important that, at the point of retirement, to benefit from two helpings of tax relief – firstly on Watts-Lay, director individuals understand which income options are best the acquisition of the shares, and secondly on the for their specific situation. transfer of the shares to the workplace Sipp. at Wealth at Work New regulations dictate that employees no longer However, without the appropriate financial need to convert a pension into retirement income by a education, employees may not understand how to certain date. Therefore, individuals must choose the maximise savings or mitigate tax. As a result, their most appropriate income option at retirement, such as long-term retirement savings may suffer. an annuity or drawdown. The key issue with all of this is that employees need They need to understand the advantages and to rethink their retirement plans now – whether they disadvantages of all retirement income options to be are saving towards retirement or taking an income to able to make an informed decision because a poor live in retirement. choice could adversely affect their retirement income It is essential that employees receive financial for 25 years or more. education and suitable guidance in the workplace to Another common concern is that many employees understand their choices, what can be achieved and are not utilising their workplace savings fully and consequently make informed decisions I To find out more, visit: www.wealthatwork.co.uk April 201 www.employeebenefits.co.uk 1 COST-EFFICIENCY FINANCIAL EDUCATION 03 Economical ways to increase awareness The benefits of financial education are clear and the variety of delivery methods available to employers means it can be a low-cost exercise, says Sam Barrett O TAX BREAKS ffering employees financial education bust, there are various motivations for can deliver a number of benefits for offering financial education, says Jeanette employers, ranging from improved Makings, director, financial education services ON ADVICE engagement to reduced sickness absence. at Close Asset Management. “Some And for employers that are keen to practise employers feel it is their duty of care, others what they preach, it is also possible to provide want to empower their employees, and some I Employers can take advantage of a tax break education cost-efficiently. do it to improve take-up and engagement on pensions advice to make the delivery of Stuart Bailey, head of national partnerships with the benefits package,” she says. financial education even more cost-efficient. at the Money Advice Service (previously the Consumer Financial Education Board), says: Money sickness I Under HM Revenue and Customs rules, “Financial education can make a significant It is also good for business. According to statutory instrument 2004/3087 exempts the cost difference to employees. It is not just about research conducted by Onepoll for Axa in of pensions advice and information from a helping people with problems, it is about June 2010, poor understanding and control benefits charge as long as: similar advice is giving them the information they need to of personal finances by employees can cause offered to all employees; advice does not extend make the most of their money.” something known as money sickness beyond pensions into general financial, A number of drivers are prompting syndrome. Symptoms including anxiety, particularly tax, advice; and the cost is no more employers to consider financial education in depression, sleeplessness and even a decline than £150 per employee a year. the workplace. The state of the economy is in sex drive. These can all affect an playing a part, with organisations recognising employee’s productivity, possibly leading to I Although this arrangement offers both that staff appreciate help in making their higher levels of sickness absence. employers and employees a tax break, few money go further in tough times. To avoid such problems, various forms of employers use it. But whether the economy is in boom or financial education are available. Roger Breeden, principal at Mercer, says: “There are I The problem is, you do not get much pensions plenty of ways to deliver financial education, advice for £150. For example, to carry out a full including online programmes, written pensions review, you need about seven or eight material, presentations, seminars and one-to- hours of advice, but £150 would pay for less one sessions. What is right will depend on the than an hour’s face-to-face advice. type of education [employers] want to deliver, with the cost generally increasing as they I The tax break applies only when the cost of include more face-to-face sessions.” pensions advice is £150 or less. Provide more Some financial education can be provided costly advice and the whole amount is taxable, at no cost. The Money Advice Service was set not just the excess over £150. up by the Financial Services Authority (FSA) to help people manage their finances better. As well as providing information to individuals, it also runs a financial education programme employer to understand the workforce and for employers. In the four years it has been put together a programme that suits its running, the service has worked with more needs. We will look at how it normally Luke Best than 180,000 employees. communicates with employees and what Bailey explains: “Initially, we work with the areas of financial education are relevant. We L 04 FINANCIAL EDUCATION COST-EFFICIENCY www.employeebenefits.co.uk April 2011 do not charge the employer, although it will have to be prepared to allow employees to CASE STUDY take some time out to attend a seminar.” Employers can also tap into the resources Workshops pay off for BGL staff of Life Academy, a charity designed to help people prepare for life changes such as Insurance broker the BGL received and we get lots of retirement and redundancy. This organisation Group has added a financial requests for more financial also provides a financial education education programme to the education, so we decided to programme, Learn About Money. Stuart range of benefits it offers its broaden out the programme.” Royston, chief executive of Life Academy, 2,100 employees. After researching the says: “We can provide an online programme Lucy Painter, associate market, Painter decided to insurance and savings and and written resources as well as face-to-face director for shared services use the Money Advice Service investment, were launched in education. We do charge, but this will be group HR at the company, to provide a financial March, with staff given time dependent on the employer’s ability to pay.” says: “We already run education programme. off work to attend. pension seminars and one-to- “We really like the “We are monitoring Online services one sessions with our material,” says Painter. “It feedback from the workshops The internet has also helped to make financial pensions consultant, AWD covers a broad range of to help us decide what to offer education accessible and there are plenty of Chase de Vere, as well as topics and it makes finance next,” says Painter. “We want web-based programmes available. These vary giving employees access to fun and simple, which aligns our employees to benefit from in price depending on the provider, the financial help on our well with our culture.” the information they receive, number of employees covered and whether employee assistance A series of Money Matters using tips from the workshops additional services are purchased. For programme (EAP). workshops, which include to help them make the most example, Killik Employee Services’ online “These are very well budgeting, borrowing, of their money.” programme Money in Mind costs an average of £15 a year per employee. Lauren Peters, head of financial education for Money in Mind at Killik, says the online year at a cost of about £3 per employee. maturation. Mercer’s Breeden says: “This can environment is great for financial education. Often, it will come down to what the be very beneficial as employees are able to go “Employees can access it wherever they employer is trying to achieve, says Mick away and use the information. But if want, at home or at work, and it is really Calvert, head of financial planning at Towers [employers] wanted to do something more interactive with plenty of tools and Watson. “If an employer wants to deliver general, such as raise awareness of the need calculators,” she explains. “Additionally, financial education to its employees on a to save, they might want to do something on employees can use the live chat facility to ask cost-effective basis, we recommend starting a more regular basis.” questions they might not have felt able to ask with broad sessions and then filtering down It is also important to consider the type of in a seminar.” to one-to-one sessions for those that need financial education employers want to deliver. Broader and more bespoke services are them,” he says. “A lot of employees will find For example, few employers will attract many also available, without necessarily increasing their questions are answered without the staff to a seminar on debt management, but the cost. These can include seminars and need for one-to-one advice.” this subject could be tackled online or by presentations, as well as online learning. For Tying financial education into a particular directing employees to debt advice through instance, Close Asset Management works event can also be successful. Possible triggers an employee assistance programme. with one employer with 5,000 employees to could be retirement, redundancy, flexible Given the breadth of financial education put together a programme of 40 events a benefits enrolment and share plan available, the most effective approach is likely to be a combination of services. For instance, Breeden explains the employers he works IF YOU READ NOTHING ELSE, READ THIS . . . with often offer their staff programmes from the Money Advice Service. “Employees will have varying needs when I There are a number of ways in which I The cost of providing financial education will it comes to financial education,” he adds. employers can provide financial education often depend on what an employer is trying to “Whether they need information about the for their employees cost-efficiently, such as achieve by offering it. basics or more personalised help with their online programmes. pension planning, offering a broad spread of I Tying financial education into a particular options will help them all benefit from I Some services, such as those provided by the employee event, such as retirement or financial education.” I Money Advice Service, are available at no cost redundancy, can be a particularly effective to an organisation. way to deliver it. Read more on financial education at: http://bit.ly/hIu30y Rethink retirement? The changing pension and retirement landscape means employees now have a number of important options to consider. The removal of the default retirement age and a greater degree of flexibility in how pension benefits are taken is resulting in employees needing to rethink retirement. WEALTH at work is a leading provider of financial education in the workplace. Working with some of the UK’s largest companies, we are helping thousands of employees plan for a better retirement. To ensure your employees know the facts and can make informed choices, please call us now on 0800 028 3200, email email@example.com or visit www.wealthatwork.co.uk WEALTH at work is a trading name of Wealth at Work Limited which is authorised and regulated by the Financial Services Authority and is a member of the Wealth at Work group of companies. Registered in England and Wales No. 05225819. Registered Office 5 Temple Square, Temple Street, Liverpool L2 5RH. Telephone calls may be recorded and monitored for security and training purposes. 06 FINANCIAL EDUCATION RETAIL DISTRIBUTION REVIEW www.employeebenefits.co.uk April 2011 Meeting the cost of expert opinion The Retail Distribution Review’s ban on commission for pensions and other investments could lead to less financial advice on offer, says John Greenwood F or decades, much of the financial advice, of employees’ first-year contributions, even information and education employers though they have been recouping an AMC of have relied on to communicate benefits only between 1% and 1.5% each year. to staff has been paid for out of commission A similar scheme set up on a fee basis received by advisers for setting up contract- would typically deduct a lower AMC from based defined contribution pension schemes. members’ funds, commonly between 0.3% While larger employers have tended to pay and 1% a year. Under the commission model, fees for financial consultancy services, many the insurer then recoups the money it has organisations with 1,000 employees or fewer paid out in commission through the higher have relied on commission deals to pay for AMC deducted from the employee’s pot over advice on choosing a pension scheme and the decades of his or her saving lifetime. communicating its benefits to members. These upfront commissions have, in many But new rules to be introduced 20 months cases, been used to fund financial advice, from now will make commission on pensions education and communication programmes and investments illegal, prompting some implemented by advisers. experts to predict a decline in the amount of face-to-face financial advice, group Strapped for cash presentations and other financial guidance “Will employers step Charles Cotton, head of reward at the delivered to employees. Commission on pensions and other up to the plate and Chartered Institute of Personnel and Development (CIPD), says: “This begs the investments will be outlawed from 31 pay for advice, question how employers are going to react December 2012, when the Financial Services when the Retail Distribution Review abolishes Authority (FSA) implements the Retail believing it to be commission on pensions. Will they step up to Distribution Review (RDR), an initiative that aims to raise standards of professionalism in money well spent?” the plate and pay a cheque for financial advice, believing it to be money well spent? the financial advisory community and will Charles Cotton, CIPD Some organisations that are more strapped require advisers to be more transparent about for cash may end up not doing so.” the charges they make. That view is backed up by Thomsons But experts fear an unintended Online Benefits’ 2011 Employee Rewards consequence of the RDR will be a reduction Watch Survey, published last month, which in the availability of financial advice, as found that 46% of respondents would not employers balk at the prospect of signing a pay a fee to an adviser for setting up a group cheque for services they have seemingly personal pension (GPP), while 58% were received for free for years. unaware they could face paying a fee for The reality is that this financial advice setting up a new scheme from 2013. never was free, but paid for out of the annual Michael Whitfield, chief executive of management charges (AMCs) of pension Thomsons Online Benefits, says: “When the scheme members. Some pension providers RDR comes in, you will end up with the haves have been paying commission of up to 35% and the have-nots because those with low April 2011 www.employeebenefits.co.uk RETAIL DISTRIBUTION REVIEW FINANCIAL EDUCATION 07 budgets for internal communications will balk consultancy charging, in some cases paying at having to pay a fee for them.” as much as £200 or 20% of the first year’s That is precisely the dilemma that would premiums. For employees who stay with that face Rachel Scott, finance director of William employer until they retire, this can work out Martin Property Consultants, if, after 2012, as cheap or even cheaper than stakeholder- she wanted to repeat the benefits package style charges. But for those who change job relaunch the company has just carried out, regularly, consultancy charging could work with the assistance of consultancy Lorica. This out considerably more expensive. used a combination of commission and Clive Grimley, partner at Barnett savings from implementing salary sacrifice Waddingham, says: “If an employee joins a arrangements to pay for the new scheme but never actually hears anything programme. Take-up of William Martin’s GPP from the employer’s advisers, they may be scheme has been boosted from about 20% upset to realise they have been charged for to 90% following a comprehensive that when they see the deduction from their programme of group sessions and face-to- pension fund.” face meetings with every member of staff. Tim Gillingham, a director of benefits “Staff now feel valued and are more consultancy Citrus4Benefits, believes engaged with the business,” says Scott. “I “I believe people consultancy charges will be a fixed fee per genuinely believe people need to be aware of the financial challenges they will face later in need to be aware employee, which would hit lower earners harder in terms of the proportion of life. But we would have struggled to do this of the ﬁnancial contributions consumed by charges. on a fee basis.” The FSA is completely getting rid of the challenges they will One-off cost idea of the cost of setting up pensions coming out of contributions. Apart from the face later in life” Gillingham explains: “We anticipate consultancy charging will be set at around option of paying a fee, employers will be able Rachel Scott, William Martin Property Consultants £200 or £250 per member as a one-off cost to choose a new way of paying, called for getting them into the scheme, and this consultancy charging, when the RDR comes could be deducted from contributions in year into effect. one. This is less than advisers have been Under consultancy charging, the employer getting on commission.” agrees the level of charges with the adviser. With the choice of paying a fee for advice The adviser’s charges still come out of the or putting in place a scheme where employee’s pension pot, but do so much employees could effectively end up with more quickly because the pension provider, nothing in their pension after the first year, usually an insurance company, is not some fear employers will end up doing subsidising the transaction. nothing at all, leaving staff with no financial This means employees will be charged advice or guidance at all. considerably more than the current Some smaller employers that are very short stakeholder AMC cap of 1.5% in the early of cash could end up switching to the new years of their pension saving under national employment savings trust (Nest). Nest, which goes live later this year, has been set up as a low-cost default option to receive IF YOU READ NOTHING ELSE, READ THIS . . . contributions from employees whose employers do not elect to take out a private sector company pension scheme when I Commission on pensions and investments will those that are short of cash to move away automatic enrolment duties kick in. be banned from 31 December 2012, when from providing an occupational pension Under auto-enrolment, which starts from the Retail Distribution Review is implemented. scheme and instead enrol employees into the 2012 with larger employers and rolls out to national employment savings trust (Nest). the smallest companies by 2016, every single I This will pose challenges for employers when it employer in the land will be required to comes to funding financial education for I Without financial education around pensions, automatically enrol every member of staff employees around pension provision. employees risk opting for inappropriate into a company pension scheme or Nest. investment funds or selecting over-ambitious The implications of employees not I The move could prompt smaller employers or retirement dates. receiving financial advice on their pension are Luke Best wide-ranging. Full face-to-face advice, or more limited financial guidance in group L 08 FINANCIAL EDUCATION RETAIL DISTRIBUTION REVIEW www.employeebenefits.co.uk April 2011 CASE STUDY Barbon boosts engagement through benefits Insurance brokerage and services plan, bikes for work, childcare free Moneymadeclear in the Sunday Times’ provider Barbon, which has 750 vouchers and payroll giving. But service to give 100 Best companies to employees, emerged as a participation rates remained presentations to staff work for. successful standalone business stubbornly low, with barely a quarter at several company Richard Walden, HR after its parent, a property of staff in the pension scheme and locations. director at Barbon company, collapsed in 2008. At the cash plan under-utilised. As a result, (pictured), explains: “We the time of its parent’s demise, no In 2010, Barbon initiated a big pension participation think that everything is benefits were offered to staff and engagement push to increase increased by 31% in about employee turnover was high. participation rates in benefits, a year, with health engagement. It means Retaining talent became a key which included a ‘pension wheel’ cash plan utilisation up 45%. better results for the company and, objective for the new management desk drop, a concertina leaflet for Absence rates have also fallen from ultimately, better returns for team, which introduced a pensions and a new benefits between 5% and 6% across shareholders. comprehensive package of group booklet. The HR team also various company locations to “It is not just a nice thing to do personal pension, life assurance, a arranged for representatives from about 3%. In January, Barbon was for people, but is a way of building flexible benefits plan, health cash the Financial Services Authority’s accredited with one-to-watch status a better business.” sessions drives up take-up rates, although Collectively, they have spent millions them, from the traditional way through the take-up will be less of an issue when auto- developing new web-based portals and intermediary, more towards what is offered enrolment is mandatory. corporate wraps, offering employees a range through providers.” But a whole host of other problems can of savings wrappers as well as online tools Not everyone is convinced that corporate arise, with employees running the risk of and information. wrap is the complete answer to employees’ opting for investment funds that are not Richard Morgan, director of consultancy need for financial advice, or employers’ need suitable for them or choosing unsuitable, services at Vebnet, says: “Employers will see a for member communication strategies. But over-ambitious retirement dates. shift in the way information is provided to for those employers that do find their options The CIPD’s Cotton says: “Financial advice constrained when commission finally and education communicates the value of the disappears, Cotton advises getting what they proposition offered by the employer, helps can for free. staff facing the shift from defined benefit to THE RDR’S IMPACT defined contribution [pension scheme] and Workplace initiatives can reduce their money worries. Previously, “The FSA and NAPF [National Association of I When the Retail Distribution Review (RDR) most calls to EAPs [employee assistance Pension Funds] both have workplace comes into effect, financial advice, education programmes] around money were in January initiatives and will send people out to speak and guidance from independent financial and February; now it is all year round.” to employees,” he says. “Or employers can advisers (IFAs) and benefits consultancies get their local IFA to come in and give a talk. will be charged on a fee basis agreed upfront Money worries between the adviser and the employer. They will often offer generic information on With most economists predicting austerity for the basis that those who want more years to come, money worries look like information make an appointment to see I Previously, some financial advice was paid for becoming an increasingly significant issue for them directly.” out of annual management charges (AMCs) staff, and employers seem to see this as an Employees can also be directed to the for pension scheme members. opportunity for engagement. helplines and websites of the FSA or the Standard Life’s Insights into Financial Pension Advisory Service, an independent I Some employers may balk at paying advisers’ Responsibility research published last month organisation that helps with consumer fees, leaving employees with less access to showed that eight out of 10 employers feel pension queries. financial advice. responsible for their employees’ financial In this age of austerity, thrift is becoming security, with 22% of employers feeling an essential part of life. It may well be that I Consultancy charging, a new way of charging primarily responsible. the RDR brings that sense of economy to the for advice on pensions, will be introduced, Several pension providers and employee field of workplace financial advice I with advisers’ charges deducted from benefits consultants that see technology as at employees’ contributions. least part of the answer to the problem of Read also Buyer’s guide to contract- employees’ lack of financial advice. based DC pensions at: http://bit.ly/gndTbR Employees left in the dark ADVERTISEMENT FEATURE on impact of default retirement age abolition. According to recent research from Close – providers of employee financial education – plans to scrap the default retirement age are a cause for concern among most workers. A significant proportion of employees have been left uncertain about provide help. Financial education inspires people to take control of what impact the changes are going to have on them and their long term their finances. For employers, it’s important to make sure that every savings plans – and many of them are looking to their employer to resolve pound of payroll works to attract, retain and motivate staff, leading to the confusion. enhanced staff loyalty. New Government legislation on the default retirement age (DRA), which Close has long-standing experience and expertise in the delivery of financial will take effect from 1st October 2011, will affect everyone of working education , having delivered pre-retirement and senior executive events for age in Britain and means that employers can’t insist on their workers 40 years with over 200 of the UK’s best known employers, including almost retiring at 65. As an initial reaction, nearly one in ten employees saw the a quarter of FTSE 100 companies. Each year, Close delivers hundreds of scrapping of the DRA as an excuse to save less, as they simply intend to events across the UK to thousands of delegates, in formats that meet each work for longer. employer’s needs as well as matching the culture of the organisation and its Almost two thirds of those surveyed by Close feel that it is their unique employee groups. These can range from 3 day residential courses employer’s responsibility to keep them informed of how the changes will to one hour webinars. affect them, and a fifth said that they would look to their employers for Close’s dedicated, in-house teams of specialist speakers, account advice in the first instance. Most workers are aware that they would need managers and event managers enable them to deliver extensive national further information about the new legislation before deciding whether they programmes as well as providing a full solution from programme design would work past the age of 65, but less than 6% said they feel satisfied to promotion to delivery. Success is evidenced by satisfaction ratings: with the information they have received on the changes so far, suggesting of over 90% for employers, delegates and private clients and by client a lack of communication from employers. The vast majority say they have retention rates of over 99%. not received any information on the changes at all. As well as providing bespoke financial education for employers, Close Face to face financial education, such as workplace seminars, was delivers a rolling annual programme of public one day pre-retirement thought to be the most effective method by 83% of those surveyed. courses in venues across the UK. This programme is designed to provide With wide ranging legislation, and lack of central information being employers with access to retirement events when they do not have provided to workers, the onus is on employers to step up and sufficient leavers to justify a bespoke retirement course. To find out how bespoke financial education could help your business, or to get the current programme of events, go to www.closeam.com/employers, email firstname.lastname@example.org or call +44 (0)1606 810 100. Issued in the UK by Close Asset Management Limited (Company No. 1644127) which is registered in England and Wales, is authorised and regulated by the Financial Services Authority and is a subsidiary of Close Brothers Group plc. Close Asset Management Limited (trading as Close) is a member of the Close Asset Management group and has its registered office at 10 Crown Place, London EC2A 4FT, VAT Registration No. 245501386. Telephone calls made to any member of Close Asset management Limited may be recorded, and recordings may be used for training purposes or to meet our regulatory requirements. Any data provided during the call will be used and held in accordance with relevant data protection law. BO EA TE U RA YO RL A R T O K Y VA A BO IL BL O AB E KI LE N N G : OW shortlist announced In association with VISIT WWW.EMPLOYEEBENEFITSAWARDS.CO.UK OR TURN TO p.16 TO FIND OUT WHO HAS BEEN SHORTLISTED. AWARDS CEREMONY: THURSDAY 9TH JUNE, THE ARTILLERY GARDEN AT THE HAC For information please contact: LORRAINE STINSON Make sure you join the celebrations this summer! Event Coordinator Book your table now: T: 020 7970 6524 E: email@example.com www.employeebenefitsawards.co.uk ASSOCIATE SPONSOR SPONSORS INCLUDE CHARITY PARTNER April 201 www.employeebenefits.co.uk 1 WHY OFFER? FINANCIAL EDUCATION 11 You know it makes sense Financial education pays off in a variety of ways for both employees and employers, says Jenny Keefe S tress caused by money worries reaches But should employees boost their financial the time to do this is the workplace.” across the generations – whether it is a acumen in their own time or does an As regards pensions, the move away from junior worker fretting about their next employer stand to gain by offering financial defined benefit (DB) towards defined rent payment or a senior executive scrimping education? Duncan has no doubts about the contribution (DC) schemes means staff need to afford school fees and a four-bedroom benefits for employers. “The employees gain more guidance than ever. “Financial house in London. increased appreciation for the organisation’s education will keep senior employees on the In July 2010, Axa’s Money sickness benefits, which can come at a considerable right track from a tax perspective and this syndrome survey found that nine out of 10 business cost,” she says. “This, in turn, leads was never more important than today with all adults are anxious because of poor financial to increased motivation in the workplace and, the pension rule changes,” says Biggs. understanding or control over their personal ultimately, production.” finances. The Institute for Employment Meanwhile, workers who are desperately Legal action Studies’ Financial wellbeing in the workplace worried about debts become less productive. Despite this, just 30% of staff believe their report, published in March 2009, found that Duncan says: “Problem finances can be a employer is doing a good job in helping them 10% of employees believe financial concerns considerable area of stress and anxiety, so plan for retirement, according to Mercer’s negatively affect their performance at work. addressing these issues should make for a November 2010 survey Employee rewards, Helen Duncan, head of employee more well-balanced, less-stressed workforce.” benefits and savings. In extreme cases, education at Bluefin, says: “Workers should James Biggs, corporate pensions specialist employees could turn to legal action to no longer consider personal finance to be at Lorica, adds: “Proper planning gives an recover any losses. “Many employees do not ‘something I don’t get involved with’. There is enormous sense of wellbeing. Questions such pay in the right amount of personal an increasing need for people to understand as ‘what if I die?’, ‘how will I retire contributions,” says Biggs. “But how many and make decisions about their financial comfortably?’ and ‘how do I save for my son’s employers actually help them understand this future. Homeowners do not need to be university fees?’ bother employees if they and act on it? In fact, some employers prefer trained plumbers and carpenters, but they remain unanswered. In reality, we as a nation not to, for fear of being sued for giving gradually learn basic DIY. Finance is the same, are hopeless at fitting this into our own spare advice that may turn out to be wrong. We unless they are in the minority who can afford time. Lives are busy, work is hard and families warn that it is more likely that an employee a financial adviser.” can exhaust. Therefore, the best place to find would sue for not being educated.” Finally, it is crucial for employers to seek workers’ views on the financial education IF YOU READ NOTHING ELSE, READ THIS . . . provided. Sean McSweeney, principal corporate consultant at AWD Chase de Vere, I As many as nine out of 10 adults suffer stress morale, motivation and efficiency. says: “To ensure employers get maximum over money matters, according to Axa benefit for time and money spent, they research. Studies also show financial anxieties I The UK’s pension regime has become highly should first understand their workforce’s can affect performance at work. complex, and workers need help in planning needs. Financial education will provide contributions and managing investments. positive results for employers only if the I Financial education can help employees services offered are actually wanted and appreciate their, often costly, benefits I Employers should consult staff on how a valued by employees.” I packages. This, in turn, can boost staff financial education programme will work. Luke Best Read also Buyer’s guide to financial education at: http://bit.ly/gSIeX8 EMPLOYEE BENEFITS’ 6TH ANNUAL SUMMIT P E N H A L O N G A H OT E L S PA & G O L F R E S O RT S SINTRA, PORTUGAL Leading employers will gather at this year’s Summit to take part in inspirational plenary sessions, master classes and in-depth workshops delivered by the event’s sponsoring partners. Confirmed delegates include: N BG Group N United Health Group N Eon N Orange N Viacom Global Ltd N Barclays Cap- ital N Sun Microsystems N IBM N Freshfields Bruckhaus Deringer N National Grid N Cable & Wireless N Shire Pharmaceuticals Group N Amey Comet N Novartis N Grant Thornton N Virgin Media N IPC Media N Torex N Marriott Hotels SPONSORING PARTNERS To take part as a sponsor, please contact Suzanne Saunders Suzanne.Saunders@centaur.co.uk or on 020 7970 4929 April 201 www.employeebenefits.co.uk 1 INTERACTIVE FINANCIAL EDUCATION 13 Effective networking Interactive tools can be a persuasive way to get employees interested in financial matters, says Roger Carter S exing up the perennially arid subject of In February this year, share registrar financial literacy is a challenge for even THE RISE OF SOCIAL Equiniti launched an online financial literacy the most creative of communicators. To help employers engage staff in such matters, NETWORKING campaign featuring a Gilbert and Sullivan- style cartoon operetta to give its 18 million a host of interactive tools have been UK shareholders a better understanding of developed in recent years. I While interactive methods such as online complex financial topics. Entitled The Big In fields such as pensions, tax-efficient modelling tools and, to some extent, webcasts Picture: Hens and Equities, the operetta benefits, flexible benefits and share schemes, and podcasts, seem well-trodden territory, the features singing chickens but covers the financial education is now likely to include ‘undiscovered country’ seems to be blogs, serious topic of how inflation can affect a interactive and online modelling tools, as HR Twitter, Facebook, and smart phone apps savings nest egg and jeopardise a person’s moves towards ever-more sophisticated (although JLT has developed a free BenPal entire financial wellbeing. communication techniques, including pensions modeller app). webcasts, light-hearted presentations, blogs Barnyard operetta and other forms of social networking. I Take-up of social networking to assist in Henryk Dubeck, head of products and Colin Mayes, European PR manager at financial literacy seems sparse, at best. marketing of Equiniti’s Investment Services consultancy Aon Hewitt, says: “With the help division, says: “The starting point behind the of IT interactivity and other methods, if I HR tends to look at effectiveness in terms of barnyard operetta was a belief that while [employers] can get staff to engage and take-up. With pensions, for example, this is many people do understand financial understand these financial products, then, relatively easy to measure. Social networking is concepts such as inflation, they are often not ultimately, they will value them more, and far more difficult to assess in terms of impact, confident to use the knowledge in their day- [employers] will bolster retention.” although forums such as Facebook do have the to-day decisions. Our aim is to surface this advantage of appealing to younger members of financial knowledge and give people the Interactive offerings the workforce. confidence to act on what they know, instead Employers can now take advantage of of being intimidated. For us, the modular interactive offerings from providers such as I Twitter may be seen as too much like a news structure of this pilot project delivered on all Aviva, Axa, Cigna, Legal and General, and feed, which can seem too transient to be put counts: quirky animation, interactive quiz and Vebnet. These include Aviva’s virtual pensions front and centre around financial education. survey gathering opinions. guide, complete with a television-style “Our aim was to generate interest in our presenter, to walk workers through their own I Engaging employees with interactive financial audience, give them the confidence to seek scheme, and healthcare provider Cigna’s education tools has to start with getting the out what they want to know, and apply what online questioning, which helps staff analyse proposition right. they learn to their financial decisions. We dental issues to aid long-term oral care. want to encourage involvement and In a similar vein, Punch Taverns offers an I When people have a good experience, they engagement, not just impart knowledge.” interactive quiz, constructed by provider are likely to tell others about it, and sites such The use of interactive software has Vebnet, which is aimed at helping staff to as Facebook can help to facilitate this. However, become important enough for many identify lifestyle choices in relation to their the jury is out on whether this will be a future organisations to allocate monthly time benefits. Through the questionnaire, springboard to propagate financial literacy allowances during the working day for staff employees find themselves categorised in and education. to get to grips with the tools. various animal guises, such as Happy But the advantages of often-expensive Hedgehogs or Floating Butterflies. interactive offerings may depend on where L 14 FINANCIAL EDUCATION INTERACTIVE www.employeebenefits.co.uk April 2011 employees are on their learning journey. work out what will drive that group. If they Jonathan Watts-Lay, director of Wealth at present benefits in the right way, employees IF YOU READ NOTHING ELSE, Work, says: “Employers need to keep their will know what is in it for them.” READ THIS . . . staff awake long enough to talk about To get the most from interactive financial pensions. They have to get the education education tools, employers should think I Financial education is now likely to include right, before they get them online. It takes a about what they offer in a clear, holistic way. interactive and online tools, such as lot of work to whet their appetite. For example, with the arrival of corporate quizzes and modellers. “If they have got 25-year-old graduate wrap platforms, which encompass pensions, I These can help staff to better understand trainees on low salaries, they are not going to share schemes and corporate individual complex financial topics and engage with get them excited about pensions – they might savings accounts (Isas) among other benefits, their benefits package. be focused on buying a car or saving for a if employers do not educate people, workers I Some employers give staff time during the deposit on a flat. The point is, [employers] may not know why they are going online. could have the best interactive site in the working day to use interactive tools. world, but they are not going to get people One-to-one help like that interested. Angus Jones, chief executive of independent “At the other end of the scale, when financial advice firm Clarity, says: “Workers range of tools that reach workers so they can employers have got someone in their 50s often need to be supported with one-to-one solicit three responses. Firstly, databases must with an eye on retirement, then talk to them help, so a person who is moving up in the record and analyse information from them. about pensions, use an interactive calculator, organisation may need extra help in assessing Secondly, [employers] must educate [staff] show them all the pensions they have got, their package.” and have calculators in a learning area they use the tools to highlight the alternatives in It is also vital to monitor website or can use for their own research. And thirdly, it the closing gap until retirement. In short, intranet traffic and benefits promotions. is about the ability to act there and then. For [employers] must segment the workforce and Jones adds: “Employers have got to have a instance, [staff] have got to have the buttons that, say, allow them to increase their pension contributions by 3% per annum. “Multimedia and electronic offerings must CASE STUDY exist wherever possible to encourage staff about the benefits they will get from using it. Using a pensions calculator may in itself not BT transmits a model approach be very interesting, but maybe getting [staff] to set a scene and positioning the context of BT offers a voluntary away with simply a paper a lifestyle goal is a vital theme. A person with programme of financial pack of information that decades-long contemplation of retirement education for employees aged would need updating. may want a second home in Malaysia. It is over 50 to help them begin Changes are picked up by the thought of such things that will get [staff] planning for retirement. This revisions to the website, so excited about financial education.” includes seminars, offered in current information is Interactive tools can also help to ensure conjunction with provider available as it arises.” staff do not miss out on the basics. Watts-Lay Wealth at Work, as well as Using the pensions happen if [staff] go at 55 and explains: “Let’s say you have a sharesave BT’s own online pensions modeller, staff can model make the adjustments.” scheme. If staff put in the maximum of £250 modelling tool. various scenarios to show These tools help staff to a month for three years, they get a bonus Dennis Gissing, head of what benefits might be make lifestyle choices while governed by HM Revenue and Customs. If people practices at BT, says: available to them in different being fully aware of the the share price bombs in the three years, they “We have a very diverse circumstances. “For instance, possible financial will get their money back and will get a workforce and around 30% of the pensionable age in 2009 consequences. “The tools give bonus on top. The upside of successful share our employees are aged 50 was 60 and staff could draw staff personal choices in performance over those three years is a and above. their pension in full,” says terms of when do they want to whole heap better, to boot. “One of the problems we Gissing. “In 2009, the stop amassing a bigger “But if you simply present a worker with a had is the pace of change of pensionable age was moved pension, in favour of stopping share scheme modelling tool and tell them to employment and tax laws, to 65. The modeller takes into work sooner. The [tolls] are go to a website, they just will not do it. The and, of course, pension account the principle of there to get staff thinking only way to encourage staff to use these scheme changes. We actuarial reduction – the about what they are aiming tools is to give them the reason why. From supported our efforts with earlier they go, the greater the for. They may have a that seed, everything else will grow.” I website information. We did reduction will be. The bereavement to contend with, not want participants to go modeller will know what will or care or health issues.” Read also Modelling tools help staff understand perks at: http://bit.ly/gU65FE April 11/supplement www.employeebenefits.co.uk COMPANY PROFILES ADVERTISEMENT I 15 Providers of financial education Put your company ahead Widespread concern over retirement provision and rising personal debt means that employers have a growing responsibility to ensure their workforce is financially literate. WEALTH at work is a leading provider of financial education and employee wealth management services in the workplace with an excellent reputation of delivering real results for its clients. WEALTH at work provides a service which helps employees to understand how to maximise the value of their benefits by providing financial education tailored to the needs of individual WEALTH at work companies and of different employee groups within those companies. This is then supported by 5 Temple Square a flexible savings platform and wealth advice service which allows, for example, the linking of Temple Street company share schemes to pensions and ISAs, retirement income planning for retirees and Liverpool specialist support & guidance for senior executives. L2 5RH WEALTH at work services will help companies keep their employees up to date with latest tel: 0800 028 3200 government and regulatory guidance. For example; providing comprehensive information on email: firstname.lastname@example.org options at retirement or ensuring they understand the importance of concentration risk when website:www.wealthatwork.co.uk holding company stock. We are fee based independent financial advisers who provide financial advice as an employee benefit. We offer employees a financial review, whether individually or in groups. Advice can be offered via a dedicated website where employees can “self-serve” solutions. HR departments value our services because they often find themselves inundated with individual enquiries regarding employee benefits and pensions, which they are often unable to answer under the Financial Services Act. By helping companies communicate the value of their benefits we have been able to positively impact employer retention levels and ensure employees relate any benefit changes to their individual circumstances. clarity From tutorial type seminars, to one to one advice, to web based education, we can use financial One Crown Square calculators to allow people to personalise their experience and make some key decisions. Woking We can help with; Surrey GU21 6HR • Pension and benefit changes • £150 advice service tel: 0870 242 2043 • Annual financial health checks • Redundancy financial planning contact: Angus Jones • Pre-retirement planning and seminars • In-house seminars on financial topics email: email@example.com • One-to-one personal financial planning • Introducing flexible benefits website: www.clarityglobal.com Our clients include Schlumberger, PwC, Kingfisher, Compass, IBM, William Hill, Coats and Inbev Rethink retirement? The changing pension and retirement landscape means employees now have a number of important options to consider. The removal of the default retirement age and a greater degree of flexibility in how pension benefits are taken is resulting in employees needing to rethink retirement. WEALTH at work is a leading provider of financial education in the workplace. Working with some of the UK’s largest companies, we are helping thousands of employees plan for a better retirement. To ensure your employees know the facts and can make informed choices, please call us now on 0800 028 3200, email firstname.lastname@example.org or visit www.wealthatwork.co.uk WEALTH at work is a trading name of Wealth at Work Limited which is authorised and regulated by the Financial Services Authority and is a member of the Wealth at Work group of companies. Registered in England and Wales No. 05225819. Registered Office 5 Temple Square, Temple Street, Liverpool L2 5RH. 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