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									APRIL 2011

Financial education

               ways to get the
               message across

               Could RDR hit
               the provision
               of education?

               Advantages of
               giving staff
               financial nous

               Using interactive
               tools to spark
               staff interest

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:
            April 201
                                                                                                    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
04 FINANCIAL EDUCATION COST-EFFICIENCY                                                                               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

                                                                                                       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
or visit
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                                 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

        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
                                                                                    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
08 FINANCIAL EDUCATION RETAIL DISTRIBUTION REVIEW                                                                      April 2011

     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:
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, email
or call +44 (0)1606 810 100.
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                                                                                  CHARITY PARTNER
            April 201
                                                                                                               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

                   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:
                               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

  To take part as a sponsor, please contact Suzanne Saunders or on 020 7970 4929
April 201
                                                                                                    INTERACTIVE FINANCIAL EDUCATION 13

                                            Interactive tools can be a persuasive way to get employees
                                            interested in financial matters, says Roger Carter

       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
14 FINANCIAL EDUCATION INTERACTIVE                                                                               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:
April 11/supplement
                                                                               COMPANY PROFILES ADVERTISEMENT I 15

Providers of financial
                                                 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:               options at retirement or ensuring they understand the importance of concentration risk when               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:           • One-to-one personal financial planning            • Introducing flexible benefits
   website:                Our clients include Schlumberger, PwC, Kingfisher, Compass, IBM, William Hill, Coats and Inbev

                                                                                                       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
or visit
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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