CEO Monthly Oct

24 CEO MONTHLY / OCTOBER 2017 , A third (33%) of UK employees are saving less than £50 amonth, with one in five (20%) not saving anything at all, with only two fifths (40%) of employees are confident in choosing the right savings product. Despite this, whilst 65%of employers recognise that they have a key role to play in improving employees’ financial wellbeing, three quarters (75%) of employees say that their employer has not provided any financial education to help themunderstand what savings choices exist. As Savings Crisis Looms, Employers Failing To Tackle Employee Knowledge Gap A lack of across the board financial education is failing to close the employee savings gap, according to a new report published today by Close Brothers in conjunction with the Pension and Lifetime Savings Association (PLSA). The Lifetime Savings Challenge Report 2017, which seeks to understand how employees are saving, where they need help, and the level of support available, reveals that there is a distinct savings challenge that needs to be addressed. A third (33%) of UK employees are saving less than £50 a month, which includes one in five (20%) who admit to not saving anything at all. A lack of understanding amongst employees is clear. This is a real concern against a backdrop of radical change in the pensions and savings industry, as well as rock bottom interest rates. A lack of confidence when it comes to saving effectively into the right products for each individuals’ circumstances is also evident, with only two fifths (40%) of employees confident in their ability to choose the right financial product to help them achieve their savings ambitions. For example, while more than half (53%) of those aged 18-34 see either saving for retirement or buying a house as their main savings priorities, of those eligible to save via a Lifetime ISA (LISA), 42% don’t do so because they feel that they don’t know enough about the product. In spite of the fact that around two thirds of employers (65%) think the responsibility for improving employees’ financial wellbeing lies jointly with them and their employees, employers are falling short. Just half of UK employers (48%) offer some form of financial education, with 20% planning to introduce it in the next twelve months. Despite this, three quarters (75%) of employees say that their employer has failed to provide any financial education to help them understand what savings choices exist and what’s best for them. It is clear that there is a real need to examine the quality and scope of the financial education that is provided, as well as to look to see what more can be done. When it’s available in the right format, it works. More than a third (35%) of employees who had received financial education said that it had been useful in guiding their immediate, medium, and long- term saving decisions. Jeanette Makings, Head of Financial Education at Close Brothers said: “There is a looming savings crisis. 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. Worse than that, the industry is not geared up to help them. Product providers can explain their own products, and comparison websites may be helpful to compare products of the same type, but there are very few