The third, annual Employee Insight Report is published today by Capita Employee Benefits. Drawing on interviews with more than 3,000 people in employment, it assesses the financial wellbeing of the nation, and looks at employees’ attitudes towards pensions, retirement, auto-enrolment, benefits, savings and health in the workplace.
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Findings in this year’s research include:
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Employees are underestimating their life expectancy by 15 years. For example, only 2.3% of employees expect to reach the age of 100, compared to the current actuarial probability of 13.7%. The new pension freedoms, introduced by the Coalition Government in 2015, mean that employees can now withdraw all of their pension in one go – without the lock of a guaranteed income for life, people risk underestimating their own life expectancy and using up their pension pot before they die.
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Half of employees (50%) find pensions related terminology complicated and confusing, and 45% of employees say they would be willing to save more into a pension if they had a better idea of how they worked. More than half (52%) do not know how much they should be saving for retirement.
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Nearly half (47%) of employees think that everyone should have to join a private pension scheme regardless of how much they earn, with just 15% disagreeing. 39% of employees believe that there should not be an option to opt-out of workplace pensions, no matter how old somebody is or how much they earn.
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Although the changes brought a frenzy of activity in the pensions industry, employees have been more passive, with only 7% of over 55 year olds in a defined contribution pension scheme saying that they have changed their retirement plans as a result of the new freedoms. Just 4% of over 55 year olds in a defined benefit pension scheme say they have changed their retirement plans.
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A third (33%) of employees are worried that they won’t be able to support themselves in retirement, with those aged 25-44 most concerned (40%). However, of those employees that are worried, only 14% said that saving for retirement was one of their main financial priorities. The top priority for this group of employees is to save for a holiday or go travelling (26%).
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53% of employees said that coaching on both financial and non-financial issues around retirement would be beneficial. In terms of non-financial concerns, boredom topped the list (26%), followed by having no purpose during the day (22%), missing the routine of work (20%) and physical incapacity (20%). Just 14% of employees say they have no concerns about retirement.
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Employees’ financial wellbeing has improved. While in 2014 38% of employees felt worse off compared to just 27% who felt better off than in the previous year, in 2015 more people said they felt better off (28%) than worse off (26%). However, some feel better off than others – 42% of 16-34 year olds feel better off than a year ago, compared to only 19% of 45+ year olds.
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Just over a fifth of employees (22%) say they struggle to keep on top of day-to-day expenses, with younger employees struggling more (29% of those aged 25-34 olds compared to 9% of over 65 year olds).
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Almost a third (31.2%) of employees say they have lost sleep worrying about their finances. 39% of employees aged 25-34 say they have lost sleep, compared to 22% of those aged 55 and above.
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In 2014, London was the only region which had a greater number of people who felt better off than worse off financially. However, in 2015 London (33%) is joined by the South East (29%), South West (29%), East Midlands (30%), West Midlands (32%) and North West (27%) in having more people who feel better off than worse off.
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There has been a significant shift from 2013 and 2014 in terms of where employees search for information or advice on financial products, such as ISAs, mortgages and pensions. In previous years the most popular option was Google. However, in 2015 most popular way was non-governmental money-related websites (selected by 34% of employees).
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The report suggests that employers think that benefits are more important to their employees than they actually are, particularly in terms of their impact on job retention and job attraction. In 2013, 74% of employees said they would be more likely to stay with an employer that offered good benefits, but this has fallen to 66%. Benefit and reward programmes built around employer requirements have ceased to be as valued by employees – staff desire benefits that are directly relevant to their needs.
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Employers can make employees feel more valued through the simple act of a ‘thank you’ for work done. While a pay rise tops this category (52%), a thank you is the next most valued (25%), beating a bonus (19%), flexible working hours (19%), increased pension contributions (16%) and a promotion (15%).
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Three-quarters (75%) of employees say they have felt stressed at work over the last 12 months, with the problem being more acute among females (79%) than males (71%) and younger employees than their older counterparts (82% of 16-24 year olds compared to 68% of those aged 55-64). However, just 19% of employees say they have taken time off work because of stress.
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42% of employees said that if they had a mental health issue they thought their employer would be understanding and would feel as if they could take time off work to get better. However, just 33% said that if they had a mental health issue they would feel comfortable talking to their employer about it.
Robin Hames, head of marketing and research at Capita Employee Benefits, said:
“The 2015 Employee Insight Report is a fascinating and wide-ranging examination into the mind-set of the modern employee. It provides unique insights into the priorities, concerns and aspirations of the nation’s employees, which can help employers design benefits programmes and working environments that aid retention and recruitment. Key themes that emerge from the report are rising confidence among employees in terms of financial outlook and an increasing desire of employees to be treated as individuals in the context of benefits and the workplace.”
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