Joel Muckett 18 Oct 2017 03:41pm

Employee saving a concern as crisis looms

Employees are being failed by a lack of financial education as a savings crisis approaches

The Lifetime Savings Challenge Report by Close Brothers and the Pension and Lifetime Savings Association (PLSA) looked into how workers saved money and where they need support.

Figures showed one in five employees were not saving any money from their salary and a third saved less than £50 a month.

The report noted that only 40% of employees were confident in their ability to choose the right financial product for savings support.

While more than half (53%) of 18 to 34 year olds prioritised saving for a house or retirement, 42% of those eligible did not save via a Lifetime ISA (LISA) due to a lack of understanding of the product.

“Not only are people failing to save enough, but many simply don’t understand the different savings choices available or how to evaluate which ones are best for them,” said Jeanette Makings, head of financial education at Close Brothers.

She said the industry was not “geared up” to assist workers, and that “very few” providers helped people choose a product that was best for them.

The report said that less than half (48%) of employers offered some form of financial education, and despite the majority (65%) believing they had a joint responsibility with employees to improve their financial wellbeing only 20% planned to introduce it next year.

Makings said “far too few” employers “adequately” addressed the issue with their employees.

“Employers are hugely trusted and perfectly placed to close this knowledge gap. By working closely with them to develop impactful education, we can help employees secure a solid financial future for both themselves and their families,” she said.

Nigel Peaple, deputy director of Dc, lifetime savings and research at the PLSA, said the research not only highlighted the low levels of savings in the workforce, but an interest and desire among employees to do more.

“Almost two thirds of employers believe that it is their responsibility to help employees to make the most of the benefit packages they offer,” he said.

When available in the correct format, financial education for employees has been proven to work, with more than a third (35%) of employees saying it is useful in guiding immediate, medium and long-term saving decisions.