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Tomorrow’s workforce, today: Can share plans be the catalyst for closing the UK savings gap?

12 January 2016

Many working Britons are still living with the financial challenges and hardship of the austerity era

It has been a key objective of Government and the financial services industry in recent years to encourage better financial planning and get us back on track towards saving for our futures. There have been plenty of attempts to incentivise us to save more, with ISA allowances having more than doubled in the last 10 years, the new £1k savings interest p.a. before tax and £5k p.a. dividend allowances. So, why are we still seeing more and more people struggling to financially prepare for their future?

The findings from an independent survey commissioned by Equiniti discovered that many working Britons are still living with the financial challenges and hardship of the austerity era, with 81% of respondents saying they were grappling with financial challenges in their everyday lives. Whilst 29% were worried about clearing debts, around one in four (24%) were concerned about not being able to afford treats and life’s luxuries. In addition, 19% said they were worried about the prospect of not being able to retire and 14% thought they wouldn’t be able to afford to get on the housing ladder.

Our research suggests it could be the nation’s business leaders that have a solution. The data revealed that two thirds of full-time workers (66%) say they are more likely to take a greater interest in their personal financial planning as a result of joining an employee share plan.

As a result of enjoying the benefits of being in a share plan at work, the additional financial actions people have taken, or would take, to further enhance their financial wellbeing at home included:

  1. Save regularly for the future – 27%
  2. Invest money into an ISA – 15%
  3. Seeking financial advice – 13%
  4. Setting up a personal pension – 8%
  5. Investing in property/ real estate – 8%

Phil Ainsley, Managing Director of Employee Services:

“The longer term savings gap is a real problem and since the economic downturn, many people have found it difficult to save. However, as the economy recovers, it is essential that as a nation we recognise the importance of planning for the future. Share plans not only offer huge financial benefits for employees involved in them but our research suggests they trigger something more important – a change in mind-set.

People involved in a share scheme are more likely to take further personal steps to plan for the future as a result - something the Government and industry has been trying to achieve for years. If the Government wants to realise the vision of a stronger savings culture in society, the answer is not to tell people to save for the future, it lies in part with encouraging more businesses to set up all-employee share plans and take advantage of the tax breaks available for all concerned.”

With pension auto-enrolment now affecting all UK businesses, the importance of companies acting as catalysts for improving the financial health of their employees is in the spotlight. Beyond basic pensions, our research suggests employee share plans could have a double knock-on benefit for employees.

Share plans create far greater staff loyalty and productivity as well as being the trigger to get employees looking more broadly into their financial planning at home. Regular saving as part of a considered plan to achieve their goals is the keystone for millions of people to secure their financial future.

Watch our film about this research, also found below.