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Employers show increasing awareness of the importance of financial education

2 May 2017

At last, financial education in the workplace seems to moving up the corporate agenda!

We are still talking more about evolution than revolution but the momentum is now clearly such that any employers who are not seriously considering implementing educational programmes of their own are in danger of being left lagging behind their competitors. 

According to Chase de Vere’s recently launched Business Intelligence 2017 Employee Benefits Benchmarking Research, 85% of employers said that financial advice was something that their employees would value and benefit from. 57% also said that they planned to help their employees make more informed choices.

The study, which this year combines qualitative research based on in depth conversations with 300 company decision-makers and quantitative data-based analysis involving nearly 2,700 firms, is produced by Chase de Vere annually. And what a difference a year can make when it comes to employer attitudes!

In our 2016 version only 14% of employers felt that it was the employer who has the main responsibility to provide financial education for employees. But this year the proportion has leapt to 20%. The proportion of employers who felt that the main responsibility for providing such education lay with the government has undergone an even more marked change, falling from 65% in 2016 to 35%.

It is also encouraging to see that 42% of employers are now willing to pay for financial advice and that 36% of firms actually plan to fund it. With take up of the now well-embedded pension freedoms having surpassed initial expectations, there has arguably never been a better time to do so.

Previous research commissioned by Chase de Vere has demonstrated clearly the value for money that such expenditure can provide. Those who receive access to one-to-one face-to-face regulated independent financial advice for pensions and retirement planning are twice as likely to be confident in their knowledge of how a pension works and more than twice as likely to have been active in increasing their pension contributions during the last three years. They are also twice as likely to be confident they will be able to retire when they want to.

Even if employers feel they can’t afford to fully fund personal financial advice they can still offer to share the costs of it with employees or simply point employees who wish to pay for it themselves in the direction of a good financial adviser.

When it comes to pensions, recent rule changes have made the approach of splitting the advice costs more attractive than ever. With effect from this April, the amount that employers can pay tax-efficiently towards pension advice per employee increased from £150 to £500, and employees in defined contribution (DC) schemes became able to access up to £500 from their pension pot to fund regulated advice if they are within two years of when they intend to retire – even if they are still aged under 55.

Further recent rule changes have increased the number of times they are able to utilise this option from once in a lifetime to three times (although they are not allowed to do it more than once in the same tax year).

If both employer and employee take advantage of these facilities the £1,000 that could be made available should in our experience be sufficient to obtain a more than worthwhile level of advice for employees with all but the largest pension pots and most complex planning requirements. It should be able to secure a full fact find, detailed discussion of the range of options available and – most importantly of all – positive recommendations on what actions to take.

Alternatively, for employers who feel they can’t stretch to such an outlay, we can offer generic seminars and workshops providing guidance in a whole range of areas – from pension planning to more basic issues like saving, protection and paying off debts. 

If you would like more information about how Chase de Vere can help by providing your employees with personal financial planning advice or by designing you a generic financial education service specifically to meet the needs of your workforce then please do not hesitate to contact Chase de Vere on 0345 300 6256 or complete this simple form and we’ll call you.

The Financial Conduct Authority does not regulate tax advice.