New research launched today amongst 223 companies representing 1.3 million employees has revealed that more than half of employers (51%) plan to make changes to their financial wellbeing offerings in the next two years.

The report from the Reward & Employee Benefits Association (REBA) in association with WEALTH at work has uncovered the financial wellbeing risk factors that are driving future change, as well as some of the existing barriers to improving financial wellbeing support.

Mitigating future risk

Rising living costs continue to be viewed as a financial resilience risk factor. Within the next two years, 61% of employers are set to address the cost of living (energy, food and clothing) with their financial wellbeing strategy. 58% will be tackling cost pressures on working carers including parents and 37% will be addressing the cost of housing. Other concerns either presently or in the future driving financial wellbeing policy include gender gaps, (86%) and redundancy of employees (39%).

The research also looked at the people risks that employers either currently address or plan to address. The majority identified improving mental wellbeing linked to financial stress (93%) as the top people risk currently or planned to be addressed. The numbers of employers set to tackle increasing financial resilience is set to double (from 44% to 88%). Additionally, managing the impact of an ageing workforce is the area of focus which will see the biggest shift with 62% set to address this in the future, compared to 19% who currently do so – representing a growth of 226%!

Retirement adequacy

In fact, the survey delved into the anticipated challenges employers’ thought could impede employees reaching retirement adequacy over the next 5 years. The top 3 are personal financial pressures (78%), low financial literacy around pensions (71%) and pension contributions being too low (65%).

To overcome these concerns, 92% of employers reported that they either currently offer, or plan to offer financial education for older employers. Providing financial education to improve pensions engagement for younger employees is set to grow by 82% (from 50% to 91%). Not only this but offering investment advice specific to retirement is set to almost double from 28% currently offering it, to 54% in the future.

Barriers to improving financial wellbeing

The survey also explored the challenges faced to improving financial wellbeing provision. Almost two fifths (39%) of employers think a barrier is employees not knowing where to start when asking for help.Other barriers include concerns over liability for providing support (40%), lack of take up of existing financial wellbeing support (36%) and that existing support is not joined up (32%).

The future of financial wellbeing provision

It seems that many employers are now focused on putting support in place to improve financial wellbeing. Almost two fifths (37%) are planning to increase financial wellbeing spend.

Across the board, when it comes to offering support, employers are either planning to or already offer financial education from an independent specialist (51%), financial coaching e.g. one-to-one guidance (40%) and regulated financial advice (27%). Employee share plans remain a popular savings benefit with 42% of employers intending to or currently offering them. The provision of tax-free saving wrappers including ISAs is set to almost double (from 14% to 27%).

Jonathan Watts-Lay, Director, WEALTH at work, comments; “It’s good to see that many employers are now focused on helping employees with a range of needs by providing them with the support needed to better manage their money.”

He adds; “After all, supporting employees to improve their financial literacy through financial education can help them make well-informed decisions throughout their career - whether they are a new parent managing childcare costs, saving for a first home, or planning for retirement. Helping employees to take control of their finances reduces financial stress and can lead to improvements in financial wellbeing for all.”

Watts-Lay explains; “The research identified that retirement adequacy is an increasing area of focus for employers. For people to better prepare for their financial future, it’s vital that they engage with their pensions as soon as possible. Joining pension schemes early and being in the right investments for the long haul significantly boosts retirement adequacy. Whilst saving more might feel out of reach - helping employees understand how small changes like budgeting, shopping smarter, and tapping into workplace benefits, can make a huge difference. Financial education can help employees realise all this.

Employees approaching retirement require support to help them make the most of their lifetime savings and avoid costly missteps - such as tax inefficiencies, poor product selection, or underestimating future income needs. Financial guidance and regulated advice at this stage is particularly beneficial.”

He says; “To overcome other challenges highlighted in the research such as employees not knowing where to seek help and underutilised benefits, it’s important to ensure the workforce are aware of the support available. This includes understanding how benefits can work together, and how to access them and use them to their advantage. This is why financial education in the workplace is so important as it can not only help develop understanding and encourage engagement, but it’s also a catalyst for behavioral change and action.”

Watts-Lay concludes; “An increasing number of employers are now turning to specialist financial wellbeing providers to bring all this support together. However, implementing robust processes including carrying out due diligence on providers before proceeding is crucial and can help alleviate any concerns over liability. Ultimately, taking an active approach with the help of reputable firms to support employees become more financially resilient has to be a win for all.”

Debi O’Donovan, Co-founder and Director of the Reward and Employee Benefits Association (REBA), comments; “Mitigating people risk is becoming a core driver of financial wellbeing strategies. Inadequate long-term personal savings levels, ageing workforces as well as rising ill health and poor mental health are key catalysts. To react appropriately, employers are needing better data in order to implement effective strategies, as well as justify return on investment.”

To read the full copy of the report please click here.