The age of company decision-makers is impacting how UK employees save money, according to new research.
Data from 500 UK employers shows that individual priorities of those setting the employee benefits agenda is impacting how and when people save for life events, including home purchase and retirement. Older decision-makers are far more likely to view pension schemes as a priority for employees than their younger counterparts, according to the new research from Smarterly.
As part of the research, ‘Realigning workplace savings to meet the needs of millennials’, UK employer decision-makers were asked: what do you think is the priority for your employees when it comes to financial wellbeing in the workplace? Seventy-eight percent of those 55 and older said ‘pension schemes’, while 62% of 25-34 year olds agreed with this choice.
Indeed, 48% of those in the 25-34 age group said that saving for milestone purchases is the priority, compared with 37% of those older than 55.
Steve Watson, head of proposition of Smarterly, said:
“We know that unconscious bias impacts recruitment decisions, but it seems that it could be affecting financial livelihoods too. Financial wellbeing is more encompassing than pensions and so it’s worrying that 80% of decision makers at UK organisations aged over 55 still say that pension provision is the priority and only 20% recognise the need for a wider approach.
“Younger decision-makers between 25 and 34, on the other hand, are more in tune with the needs of today’s workforce – with far less (53%) saying pension is the priority.
“People – young and old – need to be supported throughout their working lives by workplace savings, not just pensions. Although retirement is still a final destination, there are many other stops along the way”.
The new findings from Smarterly, which helps employees build healthy savings habits, show that workplace financial support continues to focus on pensions and pensions guidance, which is not a priority for 18-35 year olds. They welcome more support on making savings for the short to medium term.
“We know that younger peoples’ financial worries are very different from those of older generations – rocketing housing prices, low pay and a culture that normalises getting by on credit are all pressing. There are a lot of hurdles and opportunities for most young people and we now know too that 26.6% of young people expect to have to provide financial support to their parents later in life, swapping the traditional ‘bank of mum and dad’ to ‘bank of son or daughter’.”
Michael Johnson, Research Fellow for the Centre for Policy Studies and Corporate Affairs and Policy Adviser to Smarterly, adds:
“Millennials’ desire for flexibility and personalisation is at odds with how many workplace benefits packages have traditionally been designed. Historically, “the scheme” has been the focus with little attention paid to the wants and needs of individual employees. The first step towards personalisation could be to segment the workforce by age cohort. There is mounting evidence, for example, that millennials (aged 18 to 40) aspire to own their first home ahead of saving for retirement.
“Rent is, after all, “dead money”. Consequently, the inability to access funds tied up in pension savings products is relatively unattractive when compared to other vehicles that do offer flexibility of access. These include a Workplace ISA, in the form of a Lifetime ISA, which attracts a 25% bonus on contributions, paid irrespectively of tax-paying status.”
The independent research takes into consideration views from 1248 employees and 508 HR professionals in UK businesses.