Alarming statistics have informed businesses that financial stress causes a huge loss in productivity, and HR professionals could be responsible for financial literacy training for staff.
The CIPD/Benefex Reward Management Survey 2012 recently revealed that financially stressed employees spend 20 hours a month of work time trying to solve their financial problems. What’s more, the study also found that more than eight in 10 organisations offer no financial education to help employees.
While more than a third of companies plan to increase their spend on employee benefits this year, just 18% invest in communicating the full value of their total remuneration package. “If employers apply [a] duty of care to their entire reward strategy, by improving employee understanding and awareness around the value of the entire breadth of benefits they offer, employers are likely to reap the benefits in terms of recruitment, retention, engagement and productivity,” Charles Cotton, from the UK-based Chartered Institute of Personnel and Development (CIPD) said.
It is therefore beginning to be seen as paramount to regularly communicate the full range of rewards and benefits available over and above basic pay and holiday entitlement, and to provide financial literacy training as a standard benefit.
With the roll-out of increases to employer superannuation contributions (to reach 12% by 2019), superannuation is an integral aspect of financial literacy which many employees are lacking.
The latest Superannuation Sentiment Index (SSI) by consulting firm Mercer revealed that the level of understanding of superannuation is worryingly low. For the first time the index tested respondents on their understanding of super related terms and concepts, to gauge levels of financial literacy:
Less than one in four (22%) correctly answered seven or more, out of ten questions
Only 17% of respondents had heard the term ‘MySuper’
Only 7% had heard of ‘Stronger Super’.
A concerning 30% of Australians do not believe they will have enough money to last past the age of 70. According to David Anderson from Mercer, Australians are generally confused and uncertain about how to prepare financially for their retirement. They understand adequate super is the key to a comfortable retirement but they don’t know how to make good decisions that will meet their long-term needs
“Employers need to adopt financial literacy programs offered by super funds and financial planners; and consider phased retirement for their workers,” Anderson said. Super funds, employers, and the government all have a challenge to improve retirement readiness in this country,” he added.