Consider Workers’ Financial Education as Part of Your Employee Benefits Management

21 May

HR professionals should think of providing workers with financial education.

Providing workers with financial literacy education is becoming more popular among employers across the nation. A new survey by the nonprofit organization International Foundation of Employee Benefit Plans found 68 percent of the 397 U.S. and Canadian organizations polled said they are now offering employees education on their finances, such as retirement planning and investing. Educating workers about their benefits and giving them tips for how to invest and save their money can be part of effective employee benefits management, as personal problems with finances can affect workers' stress levels, causing them to feel less focused at work. Yet many workers may not realize they need education, according to a study by the nonprofit National Association of Retirement Plan Participants (NARPP), which found many workers don't feel knowledgeable about how to manage their personal finances.

HR professionals should consider offering employees financial literacy education, which can be a productive part of human resource planning to help right any misconceptions among workers about finances.

Workers Need Financial Education
According to the International Foundation study "Financial Education for Today's Workforce: 2014 Survey Results," many employees have trouble managing their debt, expenses and investments. The biggest challenges employers said their workers experience is saving for retirement, with 68 percent of participated companies saying this was a significant issue among their workforce. But just managing debt and living from day to day are also challenges employers said their workers have. Exactly half of employers said their employees had issues with covering their basic living expenses, and 45 percent even said medical expenses were a big problem for many employees as well. In fact, 60 percent said debt, such as credit cards, has affected their workforce.

HR professionals may think their workers are properly trained on retirement planning, saving plans and investment opportunities, but this can be an employee management mistake. The NARPP survey asked 5,000 employees eight financial literacy questions. Only 49 percent gave correct answers to the basic questions. For employers, this means that workers lack even some of the most simple aspects of financial literacy. However, most workers know they may not be using their earnings effectively, as 4 in 5 said they aren't knowledgeable about finances.

According to a 2012 study on financial literacy in the workplace by The Principal Financial Group, offering staff members financial education as part of the company's employee benefits management is a win-win for workers and the business. 

The Best Ways to Inform Employees
HR professionals need to be careful with how they do educate workers. Barrie Christman, vice president of independent investor services at The Principal, suggested HR professionals adopt finance education sessions in the workplace. These seminars or workshops can help employees better understand how to properly save for retirement and allocate their money, as just providing workers with educational documents may not help them.

"We know from face-to-face educational meetings that retirement savers benefit from hearing a person explain how the retirement plan works rather than having to shuffle through documents by themselves," Christman said.

Many employers have already caught on to this employee management strategy. The International Foundation survey found 58 percent offer workers online resources and courses to educate workers, while 55 percent said they give personal consultation services. Most (76 percent) provide classes and workshops to workers. Being as personal as possible can ensure all of workers' inquiries are answered and HR professionals understand exactly how staff are feeling about their financial literacy.

HR departments should consider making financial education part of their employee benefits management strategy. Even those workers with years of experience at the company may be in need of additional training. 

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