Employers recognise that pensions alone are no longer enough to support the financial wellbeing of their employees and that they need to think of the wider workplace savings landscape, including more accessible savings. In fact, 88.2% of senior HR and benefits professionals believe it is their responsibility to provide support on all aspects of financial wellbeing to their employees.
But despite this, only 21.9% of companies offer any kind of workplace savings vehicle, such as an ISA, in addition to their pension scheme. While acknowledging pensions are still very important, additional savings vehicles are needed in conjunction with pensions to support other important life milestones such as purchasing a first home or having an emergency pot of funds to cover unexpected expenses.
In light of this, 90% of employers would consider adopting the NEST sidecar approach if it is given the green light– having a savings plan attached to a pension scheme whereby any contributions paid into the combined account structure would be distributed between a savings account and the pension pot.
Recent data from Smarterly, which helps employees build healthy savings habits, shows that 73% of employers believe that workplace savings should no longer just be focused around pensions. Although 58.7% of employees agree that pensions are still the priority, there is a desperate need for the way they work to change in order to accommodate the evolving needs of the workforce and incorporate other financial areas.
Steve Watson, head of proposition of Smarterly, said:
“Pensions continue to be a primary focus in the workplace when it comes to supporting the financial wellbeing of employees, but putting aside funds for retirement is not a priority for everyone. Many welcome more support on making savings for the short to medium term to help ease financial woes.
“It’s taken NEST, a public body, to try and shake up the market. NEST’s trial of ‘sidecar savings’ is still ongoing, but our research shows that employers are very interested in this ‘two-pronged’ approach to workplace saving.
“Financial wellbeing is an important part of the employee benefit mix. Employees – young and old – need to be supported throughout their working lives and a good financial wellbeing programme can provide this. It’ll take radical ideas such as this to really engage people with saving for their retirement.”
The research takes into consideration the views from 250 HR professionals working in businesses with a workforce of 300+ employees.