Pay and Benefits

Last month we asked if you thought that employers had a duty to provide financial education to staff. Nearly two-thirds of you said no, compared with just under one-third who said yes.

 

The idea of providing employees with financial education is relatively new. However, owing to the range of financial benefits that are now on offer from employers, there is an argument that organisations should be doing more to educate staff – not only about the benefits available, but about how to best utilise them.
A key area where this is applicable is the company pension – an individual may have saved throughout their career yet when retirement arrives often there is little advice about what they should do with their fund to get the best value from it.

 

Other benefits also fall into the arena where financial education may be necessary. Company share schemes often require explanation due to the tax implications. Salary sacrifice arrangements, medical insurance and other protections also need to be understood by workers.

 

By demonstrating how benefits can be linked, staff could potentially make additional tax savings. This not only provides an advantage to the employee but also to the employer in order to ensure that value is released from the benefits package.

 

The changing retirement landscape is likely to put more pressures on companies to provide financial education. With the abolition of the default retirement age and the introduction of auto-enrolment, employers will need to increase their communications with staff to help them to understand the importance of pensions saving. Firms may also need to help employees understand when they can afford to retire.

For more on financial education, click here.