Financial wellbeing: From ambition to action

SIMON DAVIDGE: Thanks, Howard.

STEPHANIE PARTON-CORR: Thanks.

HOWARD JOHNSON: Today we'll be discussing the results of our 2026 DC Pensions and Savings Survey, initially, with a main focus on what this tells us about the disparity between where employers are and where they would like to be in the financial wellbeing space.

Sophie had an interesting discussion about this topic with Helen Perrin from our financial planning group on last month's episode, Pensions is Only Part of the Puzzle, Supporting an Evolving Membership. And that focused on the pension scheme member experience.

Today, we'll be taking a slightly different angle and looking at things more from the employer perspective. But before we get started, Simon, Steph, would you guys like to introduce yourselves, and also please tell us something about yourselves that maybe your colleagues and clients perhaps don't know?

SIMON DAVIDGE: That's absolutely my least favorite question ever.

[LAUGHTER]

HOWARD JOHNSON: Great.

SIMON DAVIDGE: So just to start off with the work stuff, I guess. So DC consultant, advising employers and trustees on all aspects of DC pension provision and increasingly moving towards financial wellbeing support for them as well. Think about an interesting fact. I once shared a tennis court with Tim Henman, much more memorable for me than it was for him.

[LAUGHTER]

HOWARD JOHNSON: Wow. That's quite cool. But you have also shared a tennis court with my dad.

SIMON DAVIDGE: Yeah.

HOWARD JOHNSON: Is that right? Boston Spa Tennis Club?

SIMON DAVIDGE: Yeah, that is correct.

HOWARD JOHNSON: So my dad has, through you, shared a tennis court with Tim Henman as well. So I'll be sure to tell him that.

SIMON DAVIDGE: Yeah.

HOWARD JOHNSON: That's a pretty good one. OK, Steph, how about yourself?

STEPHANIE PARTON-CORR: I work within our health equity wellbeing consulting team. So we work with our clients on wellbeing strategy across all the pillars. So financial wellbeing, which we'll be focusing on today, but also emotional, physical, and social wellbeing as well, thinking about holistic strategy. My fact is not as exciting or as impressive as yours. In fact, it's a bit of a life failure fact.

So my clients and colleagues wouldn't know that I studied for four years at the University of Leeds doing French and Spanish, which is where you live now. They wouldn't know that because 20 years after my degree is finished, I can no longer speak either of those languages. So it was not time well spent. Instead, having my career in financial services and not using the languages means that they're not in my head anymore.

HOWARD JOHNSON: Speak the language of finance.

STEPHANIE PARTON-CORR: Yeah, exactly.

[LAUGHTER]

HOWARD JOHNSON: Look at you. So we've all got Leeds connections. So I lived in Leeds for 17, 18 years before I moved down to London as well. So we've all spent time--

STEPHANIE PARTON-CORR: Great city.

HOWARD JOHNSON: And Simon's holding his end up in Yorkshire.

SIMON DAVIDGE: Yeah.

HOWARD JOHNSON: OK. Should we move on to the DC and pension savings survey? Simon, do you want to introduce the survey. Explain why we do it, who answers it, who helps us populate it.

SIMON DAVIDGE: Yeah, and unbelievably, we're on to the 21st version of the DC Savings Survey this year, which is phenomenal and, obviously, gives us a lot of data and history to draw upon as to see how the market's changed over that time. Think of the prevalence of old trust schemes in the past.

But if you look at the survey results that we've released this year, you can see a continuation of the trends really that we've seen in the market in the last few years. We see a reduction in charges, the move to master trust. And only around 10% of respondents now saying they use an own trust arrangement as their main DC scheme.

So a lot of those trends and themes in the market, also for employers, contribution rates, perhaps not surprisingly, have been quite stable for a number of years now, certainly at the headline rate. Clearly a lot of variation for employers within different sectors, but generally, the headline rates of contribution being fairly stable over time.

HOWARD JOHNSON: The second pensions commission, I think, reports back next spring, and it will be interesting what that says about whether the level of contributions and pension scheme needs to go up or not, and whether there'll be a response to that. But yeah, no surprise, I guess, to see that this remains relatively stable in recent years, given not a lot of money around, it seems, in the world at the moment.

SIMON DAVIDGE: Yeah, absolutely. And as we'll come to discuss, I think, later on, employers increasingly looking for greater value from that pension spend as well. Is spending more on pensions actually the best result for engaging and meeting the needs of what employees have got? And as you say, even if the pension commission comes back-- I think we all know, and the market knows, employers know, and individuals know that they need to be paying more into pensions.

But you put the real commercials for the employers over the top of that and for the individuals' challenges of cost of living, it's really difficult to go to a message of saying, we need you to be paying more. Employers, again, against the backdrop of salary sacrifice increases coming in 2029 as well, and the costs of that. Just another cost for employers doing business, which is probably the last thing they could do with at the moment.

HOWARD JOHNSON: Yeah. And before we come on to some of, I think, some changes, employer views on what their priorities are, Steph, your team has also been busily doing surveys as well.

STEPHANIE PARTON-CORR: Yeah, we have. The Global Benefits Attitudes Survey, which I know you referenced in the last podcast, but there's a really interesting stat in that one around where employees need their employers to focus when they're thinking about overarching wellbeing strategy across all those four pillars, so physical, mental, social, financial.

And when the Global Benefits Attitudes Survey asked employees where they needed most support from their employers, financial wellbeing ranked as the first or second for 50% of respondents, whereas when you look at physical wellbeing, for example, that was only ranked top one or two in 33% of responses.

So financial wellbeing is really coming up as a core employee need, where they really need employers to be going beyond what they're doing currently.

HOWARD JOHNSON: And is that something that's changed over time?

STEPHANIE PARTON-CORR: Yeah, I think we are seeing employee expectations around benefits increasing quite significantly. It's at pace. They're expecting more from employee benefit programs. And I think, traditionally, wellbeing programs have often focused on physical and mental wellbeing. And there's a lot of provisions around there. And outside of pension, financial wellbeing can feel a bit light for some companies. So yeah, that's an area where we're definitely seeing employees asking for more and employers thinking about what they need to do next.

HOWARD JOHNSON: Yeah, that probably comes on nicely to the DC survey and what's come up--

SIMON DAVIDGE: Yeah. Just picking up on Steph's point, though, first. I think we've all seen financial wellbeing being a little bit the poor relation. I think we've seen massive advances, particularly in mental wellbeing and what employers are supporting employees in the last few years. But really, financial wellbeing, I think, really starting to catch up.

And as you mentioned, in the survey, I think if we look at the top five priorities that employers cited in there, the five of them really link very closely to financial wellbeing, whether it's slightly more traditional retirement topics around retirement outcomes and giving support to people making decisions at retirement, but also building financial education and broader based financial wellbeing, looking much more outside pensions.

And I think that's where we come back to that point that we mentioned around contributions and employers saying, well, there's not more money out there to spend, but actually, how can I get more value from what I'm spending in terms of the return I get on investment from employees, and equally, how much do employees value that benefit as well? Because actually, it's how highly do they value the pension provision that's being made for them?

And when they're trying to balance that out then against short term financial pressures that they might have from cost of living, or medium term ambitions around wanting to save for a house deposit, they're trying to balance all of these things alongside pensions and long-term financial planning as well.

HOWARD JOHNSON: Yeah. Helen Perrin made similar comments in the episode last month of that nature. There's no point talking to someone in isolation about their pension if they're suffering financial hardship in these other areas because they're not going to respond.

SIMON DAVIDGE: Absolutely.

HOWARD JOHNSON: And the survey, I believe, told us something about whether employers think that they're currently offering effective financial support for people in that financial wellbeing space. What did it tell us? Do you want to expand on that?

SIMON DAVIDGE: Yeah. So, I guess, two strands to that. First of all, the role that the employer sees themselves taking, and it's kind of encouraging to see that the vast majority do see that they've got a role in supporting employees around financial wellbeing. And over 90% of them thought they should either have a supporting role in terms of making tools, and guidance, and education available to employees to use as they see fit.

But with a significant proportion as well saying that they should take much more of a leading role in supporting people, offering guidance sessions, access to financial advice, and being much more involved in supporting that financial wellbeing.

But I guess, contrasting to that, was then the responses that cited that, actually, I think it was 53% of respondents said that the effectiveness of what they're currently offering is actually really low at the moment. And I think that probably chimes with the experience that I see in the market from what I've seen employers doing in this area, and that it feels quite scattergun at the moment, that they've put a number of initiatives in place to address very specific points or problems.

So they might have introduced an ISA to support alternative forms of saving, or debt support, or introduced an app, but very disjointed in terms of what it's doing and not really bringing it together for the employee with education guidance wrapping around it for the employee to understand how it can help them achieve their hopes and dreams for the future or improve their financial resilience.

STEPHANIE PARTON-CORR: Yeah, and I think that's true of other areas of wellbeing as well. We often see employers are actually doing a lot. They're paying a lot of investment into benefit programs. And the benefit programs are rich. But that can be hard for employees to navigate, hard for them to remember what's available. So wrapping it into wellbeing strategy like you said and having a communication approach, making benefits very visible and feel relevant to employees.

So communicating benefits around when they're going to be needed in terms of life events, instead of just having a portal and the benefits sitting there in the background, and employees not really knowing how to use or access them really drives the value and engagement. And then employers will feel they're doing enough because the benefits they're providing will be used properly.

HOWARD JOHNSON: So there's probably quite a lot of those-- I think it was 53% of employers who answered our survey-- said that their financial wellbeing is fairly ineffective. Well, for quite a lot of those, they're probably offering quite a lot of help. It's just not being used because their employees don't realize it's there, or they're not able to look in the right place. So a lot of that is having good communication, by the sounds of it.

STEPHANIE PARTON-CORR: Yeah, for sure.

HOWARD JOHNSON: Yeah. OK. I guess just taking a step back, just as a DB actuary, I'm more used to thinking about spreadsheets and calculations. I guess thinking about financial wellbeing, what does that actually mean? If you both want to just briefly explain what it means to you.

STEPHANIE PARTON-CORR: For me, financial wellbeing is about feeling financially in control and resilient. So it's not having a lot of money, but it's about having enough. Managing your money and also being able to deal with unexpected events. So I think there's those three elements to it. Knowing how to manage your money, feeling in control, and also being protected against unexpected events, having that cushion.

SIMON DAVIDGE: And I think it's what first brought me and gets me really interested in this is understanding the people behind the spreadsheet. And I think, for me, the financial wellbeing is really about, first of all, building financial resilience, but how do you support people to achieve their hopes and dreams for the future.

HOWARD JOHNSON: Yeah, OK. Very helpful. I guess that financial resilience, that's partly having probably a little bit of a rainy day fund, I imagine, and giving people a bit of coaching to help them understand how much a suitable amount might be for that, but also presumably, some insurances as well that their employer might provide.

SIMON DAVIDGE: Yeah. There's a lot of data out there around the lack of financial resilience that people have. And I think the FCA Financial Lives Survey, I think, highlights that one in four people are not financially resilient when you consider the level of savings that they've got, their debts, their regular expenses.

I think a significant proportion of people with next to no savings to be able to afford a financial shock. Your car breaks down, the boiler breaks, whatever it might be, just unable to finance that one-off cost and therefore, having to take on debt or something to be able to fund that.

HOWARD JOHNSON: It all sounds pretty awful position for people to be in, really. We know there's a higher proportion of people that are in that place where they're actually under some financial stress than probably was before the coronavirus epidemic, for example. What's in it for employers, then, to try and help people to feel more financially confident and in a better shape of health from this perspective?

STEPHANIE PARTON-CORR: I guess, in my perspective, financial stress causes other health-related or productivity-related issues for employers. We know that our financial situation is one of the prime causes of general mental health and stress-related conditions. So if an employer can help an employee feel in control of their finances, then that will help them make better decisions in life.

So we know from statistics that if we feel in charge of our finances, we're more able to make the right practical steps in other areas. Go to doctor's appointments when we need to. You feel generally more in control of life. So looking after financial wellbeing has positive impacts in terms of general health and effectiveness at work in role as well.

SIMON DAVIDGE: Yeah. And I think given how relatively immature financial wellbeing market is, there's still a lot that employers can gain by making relatively small steps.

STEPHANIE PARTON-CORR: Yeah, which is a good point as well. Because we see employers looking to differentiate what they're doing in terms of benefit provision and EVP. And financial wellbeing is an area where they can stand out from their competitors, given that it's not as developed as other pillars of wellbeing. So it is an opportunity to do something that will bring employees in terms of hiring and retention as well.

HOWARD JOHNSON: And you mentioned EVP there. Do you mind just elaborating? I think I know what that means, but more for our listeners.

STEPHANIE PARTON-CORR: Yeah. Employee value propositions, so it's thinking about the whole experience of benefits and engagement and making sure that's tailored to your demographic, and it's engaging for employees, and it's in line with your employer brand and where you want to position yourself in the market.

HOWARD JOHNSON: Yeah, OK. Great Thank you. And we'll come and talk through some of those initial steps that employers might want to take to improve where they currently are in this area. But before we do so, we've talked through some fairly logical reasons why employers might want to try and do something in this area. I guess it might just help some understand that better themselves. But then in terms of, I guess, numbers behind any of that.

STEPHANIE PARTON-CORR: Yeah. We do have a host of stats through many of our surveys, and we can link to them from this podcast. But we know that if an employee reports that they're struggling in terms of their personal wellbeing across any of the pillars, then they are going to take more days off sick. And also they'll have more days of presenteeism, so when they are in work, but they're not being fully productive. So both of those will increase if they're reporting poor financial wellbeing.

HOWARD JOHNSON: Yeah. What are some of the early steps that employers might take who want to do something here then?

SIMON DAVIDGE: I think a useful start, particularly if you're one of those employers who thinks you've taken some steps against this, I think it's looking at what's in place and how effective is that being at the minute. How many people are using it, and understanding what that takeup is. I think there's then probably other parts to that around, well, what do your employees actually need and what do you think your role is and what you're actually trying to achieve as an employer, and bringing together that financial wellbeing and all the parts of wellbeing that you've got in place already.

STEPHANIE PARTON-CORR: Yeah, that's exactly it. Because there'll be examples where there's lots of different financial wellbeing tools that are available within an employer's ecosystem, and it's drawing that out and packaging it up as financial wellbeing, and making sure employees know about it. So it's as much about communication as putting a new benefit in place.

Often that's not required at all, which is good because benefit budgets are under a lot of pressure. We're working in a cost-constrained environment so just making the most of what you've got available is really important. And it can be something as simple as an EAP or a discount scheme, but that can make a real difference for employees.

HOWARD JOHNSON: And have you seen any innovative examples of how employers have managed to communicate in a way that's really effective to get better uptake of the tools that are already available?

STEPHANIE PARTON-CORR: I think multi-channel communications is what we'll always say is the most effective way to really get a message out there. So it's a combination of in-person, virtual. Employers that have apps to communicate their benefits-- that's a great way of having benefit information in employees' pockets at all times, especially when you might have a workforce that is not desktop-based. They might be in retail manufacturing, and apps can be really key then to getting benefit information in front of employees.

SIMON DAVIDGE: Yeah, I completely agree with that because you often speak to employers where all my employees aren't desk-based, and you need to give people that same opportunity to engage regardless of whatever their working environment might be, which is why I think you need that multi-channel approach. If you've got a large head office, you can go in and do face to face presentations. Great. But also those recordings, apps, and the like for people who are offsite or out on a location working somewhere, you've got to engage with them in the same way.

And I guess, at the end of the day, that difference shouldn't really matter because I think if people are doing financial planning, particularly if you're part of a household, you probably do that together. It's probably not something you necessarily do in work time. So just understanding not just your individual finances, but people are applying this in a domestic context where they've got a partner that's perhaps a different employee, a different pension arrangement, and just bringing all of that together.

And I think that's when we've really cracked financial wellbeing, that people have the knowledge to be able to understand all of these benefits that are being offered to everyone in the household and be able to maximize that, to get them in the best position they can be.

HOWARD JOHNSON: And presumably, if you're doing these things via apps as well, you can really easily track the data. And I guess that brings me on to how can employers show that they're actually doing what they want to in this space, and I guess show they're getting that return on investment? And, presumably, data collection will be part of that. Have you got any examples of how they do that?

STEPHANIE PARTON-CORR: Yeah, exactly that. So looking at utilization, looking at benefits appreciation. So employee satisfaction surveys is a good example. But we are seeing employers increasingly build dashboards where they're tracking utilization across multiple pillars of wellbeing so they can build a holistic picture on that benefits engagement across the whole suite of wellbeing services that they have available. And with retirement, I expect looking at savings into pension plans is very important.

SIMON DAVIDGE: Yeah, absolutely. And I think having that data to be able to track it over time as well, so you can measure the success of you having an engagement program. What actions are people actually taking on the back of it? Is it driving an increase in logging onto the pension scheme, changing contributions, or engaging with other benefits? And having that data to then feed back into future initiatives-- because this is not a do it once, feel quite good that I've done financial wellbeing, and move on. It's a continued progress that you're going to need to make on this.

So I think getting that feedback to understand your objectives, refine it-- you're not going to get it perfect every time-- and then developing it over time is really key to the success. And you can't do that without the data underlying this to see what people are actually doing and what actions they're taking.

HOWARD JOHNSON: Yeah. And you mentioned some of the products earlier. You mentioned discount schemes that, often, employees value. Are there any other examples of some of the financial wellbeing products that get really good take up out there?

STEPHANIE PARTON-CORR: Yeah, there's a host of them. So they can be life event-specific. So things like will writing services, mortgage advice support. The EAP has a host of financial signposting services.

HOWARD JOHNSON: Employee Assistance Program.

STEPHANIE PARTON-CORR: Yeah. And that's good because it's in the moment support. So it might sit outside of the financial wellbeing, any one to ones, or webinars the employer is hosting. But if someone has a moment of need where they're feeling under significant financial strain, just making them aware that the employee assistance program can help with that kind of thing and move them into a support that's provided, a government service, for example, at no cost.

HOWARD JOHNSON: So it's not just things that are offered by the employer that they would be able to direct people to.

STEPHANIE PARTON-CORR: Yeah, it's that broader help, which can really help in the moment.

HOWARD JOHNSON: Yeah. And Employee Assistance Programs-- I know, WTW, we're fortunate to have one of those. Is that something that's pretty common across employers at the moment generally?

STEPHANIE PARTON-CORR: Almost every employer will have one. It's just whether the employee knows that it's there and how to use it.

HOWARD JOHNSON: It's whether it's appreciated and actually used is the key.

STEPHANIE PARTON-CORR: Exactly, yeah.

HOWARD JOHNSON: Yeah. It's quite interesting for me that, actually, I think a lot of employers are probably doing some really good work here. It's just not being used and appreciated. And it comes back to that communication in a timely manner and effective manner is what it comes down to for lots of those.

SIMON DAVIDGE: Yeah. And I think beyond that as well, things like EAP, and the discount schemes, and the like, I think we'll start to see a reconsideration from employers around things like pension redirection. You look at things like the salary sacrifice cap coming in and you see that could be, potentially, the thin end of the wedge.

And actually, there are incentives for people to say, actually, can I redirect all my pension contribution away to other forms of saving and starting to build broader financial wealth and resilience in short and medium term and get that balance right. And I think, actually, if you engage people more around their short-term and medium-term financial needs, you'll actually start to engage them more on pensions.

So even if you're a trustee of a pension scheme listening to this podcast, I think there's something in terms of collaborating with the employer to bring a cohesive message to employees, rather than just communicating with them very narrowly just about pensions. Because actually paying more into your pension may not necessarily be the right thing for an individual to do. If they've got 10,000 pounds of credit card debt, should they be paying 1% more into their pension pots?

So actually just joining up and taking a financial wellbeing outlook, I think, can be a win for everyone in terms of trustees and employers around improving financial wellbeing. And obviously, clearly, for the end user, the employees, we're trying to improve their position for here.

HOWARD JOHNSON: Are we seeing that from trustees and employers where they're working together on this? Because it doesn't appear immediately obvious that they would. But actually, it seems like there's a good reason for them to do that.

SIMON DAVIDGE: Yeah, and I think part of that is probably the move away from trust. So I think, increasingly, governance committees where you've got representatives from HR reward teams much more prominent on those. They're by their nature much more joined up and embedded into--

HOWARD JOHNSON: So they'll be in touch with the master trust trustees or whatever master trust or contract based provider they've selected.

SIMON DAVIDGE: Yeah, well, partnering with their provider who's going to be delivering that education and support, and working with them, and thinking about how can we broaden this out and bring in things like guidance and wider education beyond just pensions?

HOWARD JOHNSON: OK. I'm going to check my notes. I think we've more or less covered everything I was planning to ask you about. I guess anything else that has cropped up as we've had this discussion that you want to mention before we close the podcast episode.

STEPHANIE PARTON-CORR: I guess, for me, we've talked about lots of different kind of ideas for financial wellbeing and making the most of what's available, but also thinking about tailoring that approach. So it's not that one size fits all piece. You need to think about your employee demographic and what their needs will be. And then it might be that you take a segmented approach and think about communicating certain messages to certain parts of the workforce to be truly impactful in financial wellbeing strategy.

SIMON DAVIDGE: Yeah, I'd probably echo that. I'd say, from my point, it's understand what your employees' challenges are, define what you actually want to achieve as an employer, and how do you align those two things? I think adopting that and going from there, rather than a very product-led, put a solution in place just to join the [INAUDIBLE]. There's strategy behind what you're actually trying to achieve--

HOWARD JOHNSON: --before you launch in there.

SIMON DAVIDGE: Yeah, thinking what they want, when actually you're probably somewhat removed from the realities for a lot of employees.

HOWARD JOHNSON: And it was interesting. When Sophie chatted to Helen Perrin in last month's episode, she'd also mentioned how you can position things differently depending on members' age group. I think she'd talked about calling it financial coaching for people who are maybe in their younger years, whereas people who are closer to retirement, for example, you can look to a build up to a road to retirement session.

So you'd have slightly different branding, but actually it's financial planning really. So yeah, what you're saying there is totally consistent with what Helen was saying, which is good.

So I guess, from my perspective, my takeaway here is employers are probably actually doing a lot of really good work here already. It's just slight, perhaps, repositioning and reassessment, and then trying to make sure you're getting the absolute best value. And it won't necessarily cost more than what they're currently spending, actually, to provide better output in terms of financial wellbeing for their employees. I think that probably brings us to the close of the episode.

So on that note, I'd like to thank you, Simon. Thank you Steph, today, and thank you to our listeners for listening. And look out for future episodes every other Wednesday. Thank you.

SIMON DAVIDGE: Thanks, Howard.

STEPHANIE PARTON-CORR: Thanks.

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HOWARD JOHNSON: Thank you for listening. This podcast is for informational purposes only and does not constitute financial advice. The views expressed by hosts and guests are their own and may not reflect those of their employers or affiliated organizations. All content is protected by copyright.