Context
Over the past few years financial wellbeing has emerged as a major concept in mainstream industrial and governmental discourse. In 2020, the Money and Pensions Service (MaPS) introduced a ten-year strategy for financial wellbeing, with a framework designed to help people make the most of their money and savings. However while this strategy was focused on supporting the individual, it is recognised that this must take place more widely with the workplace being a key delivery channel. The MaPS strategy document highlights that poor financial wellbeing among employees could impact upon businesses’ ‘bottom line’ by as much as four per cent. It is estimated that in 2016, the UK economy lost £120 billion and 17.5 million work hours to financial stress. Therefore, there is a need to embed financial wellbeing within all areas of life, including within the workplace
The study
This 2020 report from Close Brothers provides a granular analysis of financial wellbeing among employees, and the role employers play in increasing the financial health of their employees. The report uses data from three sources:
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Changing Trends of Financial Wellbeing (2020) – the majority of the findings in this report are based on data from the Changing Trends of Financial Wellbeing survey, which was conducted among 2,000 workers who worked for companies with 200 or more employees. The data was collected in early 2020. Following the start of the covid-19 pandemic, additional research was conducted to supplement this data, with a further 1,000 workers surveyed, alongside a wider nationally representative sample of 2,000 adults. This data was collected in May 2020. Both of these surveys were conducted by Opinium Research, as were the additional surveys (below).
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The Financial Wellbeing Index (2018) – The report also draws on some findings from two previous reports and associated surveys, the first of which – the Financial Wellbeing Index – was conducted in Autumn 2018 among 1,003 employers and 5,003 employees from firms with 200+ employees. The Index examines how ‘financially fit’ employees in the UK feel across a range of categories.
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The Lifetime Savings Challenge (2017) – The second ancillary survey – the Lifetime Savings Challenge - was conducted in August 2017 among 1,000 employers and 2,009 employees from companies with 200+ employees.
Key findings
- A third of employees aged 55+ state that they do not know the value of their pension pots, while 30% of those aged 65+ are not in a position to estimate the total value of their workplace pension savings.
- Among men, savings pots have increased by 9% since 2017. However, female employees have seen their savings decrease by 15% over the same period, and this decreases further among those women approaching retirement, with an average drop of 24%.
- All demographics spent less in the lockdown necessitated by the Covid-19 pandemic, and all but those aged 18-34 realised they could live happily on less money.
- The key motivations at work for UK employees are money (60%), to save for their future (39%), to be financially self-reliant (37%), to develop their skills (31%) and to feel like they are contributing to the household finances (23%). Older workers are most motivated by money, and far less so by developing skills and career progression.
- Less than half (48%) of employees state that they are happy with their finances. Females workers are half as likely to be very happy with their finances than their male counterparts (10% and 20% respectively).
- Around one-in-six female workers (16%) constantly worry about their finances, compared to 9% of men.
- About a third (32%) of employers believe that they are responsible for helping employees access advice on how to achieve their savings goals, while only a third (33%) of employees think that their personal financial health is important to their employer.
- Two-in-five (39%) male employees don’t think they will ever be confident when it comes to budgeting and planning, compared to only 28% of women.
- Female employees are almost twice as likely as men to identify only earning enough to get by each month as one of the biggest barriers to improving their money management (27% v 15%).
- Only a quarter of employees (26%) say that their employer provides financial education, with just 11% of employees having received financial education from their employer in the past 12 months.
- Two-in-five workers (40%) experienced increased financial anxiety as a result of the Covid-19 pandemic.
Points to consider
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Methodological strengths/weaknesses: The surveys were conducted by national research organisations so the data collected should be valid and representative. However, there is limited methodological detail, particularly in relation to the analysis techniques.
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Generalisability/ transferability: This report is of significance to anyone with an interest in the financial wellbeing of the UK population, particularly those wishing to develop an Index or scoring system in relation to financial health and wellbeing.
