Financial wellbeing: a win win for employers and employees

The news has been full of reports of unretirement and people feeling they have to work longer, possibly into their 70s, because of the cost of living crisis. The last few years of crisis are difficult to plan for, but some groups have been harder hit than others.

For many there are structural reasons why they have found themselves in lower paid, more insecure work, with an impact on their long-term earnings and ability to retire. 

But employers could help people to address some of the financial risks that mean some end up never being able to retire or facing their final years in poverty, Jane Portas OBE, creator of 6 Moments That Matter, said in a keynote address this week at the WMPeople.co.uk Top Employer Awards.

She has identified the main issues that affect people’s earning ability and financial wellbeing over a life course by applying the risk techniques she used in her career in the financial services industry to people’s lives. When it comes to the gender pension gap – the difference between men and women’s income in retirement – she found, for instance, that there are 12 causes that accumulate over a lifetime, including parenthood and caring responsibilities, flexible working, wellness, divorce and separation, domestic and economic abuse, longevity and the earnings gap. 

Portas, who is also author of The Risks in Life Series of award-winning insight reports and financial wellbeing guides and of the Insuring Women’s Futures’ manifesto, says it is vital that people are more aware of the impact of all of these factors in the long term. She has distilled six moments that matter when it comes to financial risk – choosing what to study, starting a job or re-entering the workplace after a break, choosing a relationship, starting a family, confronting health issues and retirement.

Non-linear lives

Portas argues that the support available to people and our legal systems are often standardised and assume a linear life, the standard 9 to 5 spent in the same job for a whole working lifetime. The trouble is that women’s lives have been less linear for many years, but everyone’s lives are now following similar patterns as we have to work longer and negotiate caring responsibilities, health issues and redundancy.

Portas said there is a lot of talk about women lacking financial confidence. However, she said it was more about women not being able to relate financial products to their lives. That opens up trust gaps between them and the organisations supplying those products and affects how they relate to money. “It’s difficult to relate if it doesn’t feel like your life,” she said.

She emphasises the importance of trust. In her speech, she cited research showing that business leaders are not trusted much, yet she said that employers are “the guardians of people’s financial livelihoods” at work and in retirement. “That’s a real position of power and trust is paramount,” she stated.

She added that employers are currently facing a lot of risks, for instance, the cost of living crisis, growing inequality, lack of social cohesion and mental health and employment crises. There are also risks relating to candidates in terms of a lack of relevant skills, wellbeing, pay and benefits, diversity and inclusion and flexible careers. Moreover, the risks candidates face at home impact their ability to earn.

All of these are in alignment, said Portas, but many people don’t feel their employers care for their wellbeing or that they are being fairly paid. They felt more trusted during Covid to get their jobs done. She said employers need to do more to build trust and to communicate with their employees about issues that affect their financial wellbeing, such as engaging more with their pensions, understanding the impact of part-time working over a lifetime and understanding their payslip. “This is an opportunity for employers,” she said.

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