Employers in Canada and the U.S. that have implemented financial education programs say their employees are less stressed, more prepared for retirement and have a better understanding of their finances, according to a new report from the International Foundation of Employee Benefit Plans.
Of the 397 organizations that participated in "A Closer Look: What’s Working in Workplace Financial Education," more than two-thirds stated they offer financial education to employees. Among employers offering financial education, only one-third have a workforce that is somewhat or very highly stressed, compared with 43 per cent of respondents that do not offer financial education.
“The survey found that while the benefits of financial education may take a few years to emerge as employees learn about their options, the rewards are long-term. Staff are smarter about their future and more focused during work,” said Julie Stich, CEBS, director of research at the foundation. “To increase a program’s impact, it’s critical to reach as many employees as possible. Organizations with programs they consider to be successful experience double the average participation rate in initiatives (42.6 per cent) compared with organizations with unsuccessful programs (21.3 per cent).”
Robust programs enjoy greater success
Overall, of the 270 respondents that offer financial education opportunities, 66 per cent stated their initiatives are somewhat to very successful for their employees.
Employers that have seen greater success in their programs report a robust financial education strategy. Of the 170 respondents that said their programs are successful:
- 84 per cent offer education during normal work hours;
- 50 per cent provide financial education to participants’ spouses;
- 35 per cent have assessed which financial education topics are most needed;
- 32 per cent provide services to retirees; and
- 32 per cent have a budget devoted to financial education.
Improving investment decisions
Employers also shared their views on why they provide financial education to participants. Notably, 61 per cent of respondents with successful programs stated that it’s important to improve participant/employee retirement and investment decisions. Forty-five per cent of these employers believe it is the organization’s responsibility to educate staff on pension and benefit options, encourage retirement savings and improve participant money management.
The report also found that organizations with successful programs cover more topics in their financial education programs than organizations with unsuccessful programs. Topics offered to participants include retirement plan benefits, budgeting/spending plans, employment after retirement, annuities, wills and estate planning, and life insurance.
Variety of educational programs
Employers with successful programs also use a wider variety of educational methods than employers with unsuccessful programs. Methods by which organizations provide educational services include voluntary classes, newsletters, email, workbooks, online resources and courses, retirement income calculators and free personal consultations.
“This report highlights the fact that financial education programs have made an impact on employee well-being – financially and mentally,” said Stich. “We are encouraged that two-thirds of our respondents consider their programs to be successful, and are hopeful that employers will emphasize the important role financial education has on employees’ overall well-being.”
The report uses data from the foundation's report, Financial Education for Today’s Workforce: 2014 Survey Results. In total, 397 completed responses were received in February 2014. The survey polled 310 employers from the United States and 87 from Canada.