How workplace financial education can benefit your employees
| Published date | 14 November 2016 |
| Pages | 242-246 |
| Date | 14 November 2016 |
| DOI | https://doi.org/10.1108/SHR-02-2016-0014 |
| Author | Darren Laverty |
| Subject Matter | HR & organizational behaviour,Employee behaviour |
How workplace financial education
can benefit your employees
Darren Laverty
Darren Laverty is partner
at Secondsight, London,
UK.
Abstract
Purpose –Financial education is about empowering employees to make their own financial decisions. It is
about making people aware of the choices available and the course of action they may want to take – so they
can be in the best financial shape for the future.
Design/methodology/approach –When a financial education programme is run, group tutorials are a
key component. One particular tutorial focuses on cashflow modelling, with cash flow forecasting at the heart
of such a programme. If people can visually see they cannot retire as early as they had hoped, then their
focus may shift to increasing their savings. They review how they can cut-back now to set realistic objectives
about their future.
Findings –Financial education could help to support employees in understanding how to do more for
themselves financially, and to encourage them to assess their options and better plan their future.
Originality/value –This paper talks about how the shift in the retirement age will bring some challenges for
companies and looks at how companies can address these changes. It also includes a mini case study.
Keywords Training, Learning and development, Human resource management, Benefits
Paper type Viewpoint
It is a well-known fact that people are working for longer and deferring their retirement
years.
For many years, the state pension age for men was 65 years and for women it was 60 years.
However, from 2020, both men and women’s state pension age will be 66, increasing to 67
between 2026 and 2028 and increasing again to 68 between 2044 and 2046. It will then be
linked to life expectancy, and a number of other factors after that. The Government now reviews
the state pension age every five years. This means that people in their early 20s could now have
to wait until they are over 70 before they will be able to take their state pension.
This shift in the retirement age will bring some challenges for companies. Employers will have
to manage an ageing workforce and may find it harder to bring younger people on board or
nurture a younger workforce because recruitment budgets could be restricted. Future
workforce planning could also become harder to manage, and companies could find
themselves facing skills shortages.
Each year, approximately 700,000 baby boomers are retiring. There was a time when retirees
were provided with state pension, defined benefit pension schemes linked to salary and
annuities. This meant they tended to be as well prepared financially for retirement as they could
be.
Whilst this combination of schemes or provision worked well for many years, however
with increased life expectancy, things have changed. In the private sector – at least –
defined benefit pension schemes are being closed totally, or closed to new members
with only a limited number continuing and annuities are not compulsory.
PAGE 242 STRATEGIC HR REVIEW VOL. 15 NO. 6 2016, pp. 242-246, © Emerald Group Publishing Limited, ISSN 1475-4398 DOI 10.1108/SHR-02-2016-0014
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