Stockmarket turbulence highlights the need for employer provided financial education

Educating employees about financial matters could help businesses reduce the negative impact that the crash in share prices could have on the workforce, according to Charles Cotton, Pay and Benefits Expert at the Chartered Institute of Personnel and Development (CIPD).

Cotton says, ìIt makes good business sense to ensure employees have a good financial understanding because financial concerns can cause stress and depression, resulting in poor performance and increased sickness absence. This is becoming important as more employees are covered by defined contribution pension arrangements and employee share plans. Employees may stop, or cut back, on their contributions to these schemes. However, by educating them about the long-term nature of pensions and share plans and their tax advantaged status this risk can be reduced.



ìThis comes against a backdrop of increasing mortgage costs for many workers , with some tempted to stop saving for their future by focusing on their mortgage repayments. Again, by providing financial education, employers can help their staff acquire the financial knowledge that will allow them to shop around for the best mortgage deals allowing any savings to be redirected towards their savings.

ìProviding employees with advice and education about financial matters will help them make more informed decisions about how to save for the future and deal with concerns when they arise. Better financial awareness will also help minimise the risk of people making inappropriate benefit decisions subsequently blaming their employer and impacting negatively on employee engagement, employer brand and possible litigation.î