By Kelly Parsons, Head of DC Proposition and Emily Jones, Head of Workplace Wellbeing
Employee financial wellbeing and retirement planning are often treated as separate challenges. In reality, both play an important role in building retirement confidence. Here’s why employers should look at them together.
Financial wellbeing and retirement confidence go hand in hand
For many employers, supporting better retirement outcomes remains a key objective. Yet if employees are worried about paying today’s bills, encouraging engagement with long-term savings can be challenging.
When we talk about retirement saving, the conversation often focuses on contribution rates, investment returns and pension providers. However, one of the biggest influences on long-term savings is often overlooked: financial wellbeing.
Recognising the relationship between financial wellbeing and retirement outcomes is one of the reasons we work with organisations to establish, enhance and promote financial wellbeing support.
While employees are ultimately responsible for their financial decisions, employers can play an important role in creating an environment where people feel informed, supported and empowered to plan ahead.
“We often find that employers focus on helping their employees save more for retirement. But before your people can think about tomorrow, they need confidence in managing their finances today. That’s why employee financial wellbeing and retirement planning should never be viewed in isolation.”
Kelly Parsons, Head of DC Proposition
Making the most of your existing financial wellbeing support
In many cases, organisations already offer valuable support through their existing benefits programmes, including:
- financial education
- debt support
- budgeting tools
- employee assistance programmes
- retirement planning resources
“Often, the challenge is not the availability of support, but awareness and engagement. Our role is frequently to help clients identify the support already in place and ensure employees understand how and when they can access it.”
Emily Jones, Head of Workplace Wellbeing
How financial wellbeing affects employee mental health and workplace performance
The evidence linking financial wellbeing and mental health is compelling. Research from the Money and Mental Health Policy Institute found that 86% of people with mental health problems said their financial situation had made their mental health worse. The same research found that almost half (46%) of people in problem debt also experience a mental health problem.
The impact extends well beyond employees’ personal finances and into the workplace.
The Money and Pensions Service found that people experiencing mental health problems are more likely to struggle with bills, rely on borrowing for everyday expenses and have lower confidence in managing their finances.
When employees are distracted by financial concerns, it can affect their focus, productivity and ability to engage with longer-term financial planning, including saving for retirement.
Why employee financial wellbeing matters for employers
Supporting financial wellbeing is about more than helping your employees deal with today’s financial pressures. It can also support higher engagement with retirement planning, improve wellbeing and create a more financially resilient workforce. Equally important is giving your employees the confidence and capability to make informed decisions throughout their working lives.
Feeling in control of day-to-day finances and knowing you are working towards a comfortable retirement can reduce financial stress and free your employees to focus on both their work and personal wellbeing.
How employers can help employees build long-term financial confidence
Ultimately, stronger retirement outcomes and more effective retirement planning are built on more than contribution levels alone. While many employers have valuable support in place, the opportunity lies in ensuring employees understand it, use it and benefit from it.
By helping your employees develop financial resilience, confidence and understanding, you can support both immediate wellbeing and long-term financial security, creating benefits for both your employees and your business.
Note: This article is for general information only and does not constitute financial advice or a recommendation regarding any pension, investment or financial product.
Boost engagement with retirement planning through financial wellbeing initiatives
Help your employees feel more confident about their financial future by improving engagement with the support already available.
