Recent research carried out by Standard Life and Explain the Market highlights how pensions and savings education tops millennials’ wish lists for help. Donna Walsh, Head of Proposition Deployment, takes a looks at how employers can go about fulfilling this need.
Recent research which Standard Life carried out with financial researchers Explain the Market revealed that not only are millennials far more financially savvy than perhaps thought, but also that well over a third of those surveyed, 38%, want more help with pensions and saving for later life.
The report, Supporting the ‘sensible saver’ generation: a new vison for helping millennials create strong financial futures, also revealed that millennials are open to more information about life savings and are actively looking for more help to plan for later life, with almost half, 47% looking for more help with general saving.
With millennials’ income being pulled in all directions, employers are well placed to help fulfil this need for financial education. Millennials are likely to have mortgages or rent to pay, student loans to pay off or children to support. Any help an employer can provide to support millennials with saving for the future as well as offering support to help manage debt, mortgages and savings can make a big difference to their financial understanding – and help improve job satisfaction and motivation.
Pension savings will become more complicated
Another reason why education around pensions is so important for millennials is that the way in which they approach their careers has shifted entirely from previous generations. While older generations took a ‘job for life’ approach to their work, millennials have replaced this concept with a preference for switching jobs every couple of years, resulting in numerous pots of pension funds in different places.
It’s vital therefore that millennials understand their total pension savings and education is without doubt the best way to achieve this. The Government is also pushing forward with its planned pension dashboard project this year to allow individuals to view all their pension information in one place, which will also help to engage millennials with their retirement savings.
Financial education can empower employees
Financial education in the workplace can help provide millennials with options about general savings habits and saving for the future. It can help employees feel empowered to meet the financial challenges that come their way without letting their productivity at work suffer. The benefits make a strong case for offering financial education in the workplace as it can have a demonstrable impact on an organisation’s bottom line by improving attraction and retention.
Here are five initial steps employers can take to get started on financial education for millennials in the workplace:
- Recognise all the financial commitments and priorities millennials have by not limiting communications and engagement strategies to the workplace pension only. Offer broad savings education that will appeal to a millennial’s situation such as how to invest for the future and financially supporting children. They should then be able to appreciate how their pension fits into the bigger picture.
- Offer financial education to millennials as soon as possible to help get them into the savings habit early. Offering digital tools too is essential for millennials to interact with their pension in a way that suits their lifestyle and help them recognise that their pension is essentially an extension of their pay.
- In the absence of employers providing their own financial education, third parties can provide it to employees, whether in person, at events or online. The information needs to be easy to understand, using online tools that are simple to work with.
- Employers should carve out time and space for their employees to receive financial education around savings and pensions. This could include setting aside a specific amount of time and a location with the online tools made available to best engage with millennial staff.
- Measuring changes in a millennial’s knowledge can enable employers to match their financial education efforts with the health of the organisation. Data from testing and evaluation can provide evidence that financial education can deliver benefits to the employer as well as the employee.
The key benefits of financial education in the workplace
The most obvious benefit of offering financial education in the workplace is that employees who make better financial decisions have less financial stress and are happier in the workplace. Furthermore, the education process can trigger reminders for action, such as paying off student loans, and gives employees opportunities to talk about and listen to other ideas around saving.
For employers, there are opportunities to learn what millennial employees want more or less of, and to identify total rewards elements that are missing in the benefits package they offer.
The Government has done much to encourage a change in young people’s attitude
Of course, financial education in the workplace is a tool not a solution for financial difficulties and the role of educating millennials about saving for the future shouldn’t only fall to employers.
Financial education did become compulsory in schools in England in 2013 and, with the introduction of auto-enrolment in 2012, the launch of Pension Wise to support the pension freedoms legislation in 2015 and the planned pension dashboard project due later this year, the Government has rebuilt the UK’s ‘saving for the future’ culture and has done much to encourage a change in young people’s attitude towards pensions.
With our research revealing that millennials are far more financially savvy than perhaps thought, it’s an opportune time for employers to offer education around pensions and savings, for the benefit of all.
To read more on the findings of Supporting the ‘sensible saver’ generation: a new vison for helping millennials create strong financial futures, go here
As one step towards providing financial education in the workplace, Standard Life offers support to help engage and educate millennials with their pension benefit. Our ‘ready-to-go’ campaigns are kits which equip employers with communication materials that cover all the main parts of workplace pensions. To find out more, go here