Page 15 - Savings Psyche
P. 15

The new age of saving
How employers can change the future of saving

In ‘The pinch point’ and ‘Falling short’, this report          Instead of working for a small number of companies, we
examined the decision-making paralysis that                    may work for upwards of seven, with news reports in
is deeply affecting saving, and how worker                     early 2015 stating that it is considered normal to work for
attitudes and motivations falling out of sync with             one organisation for no more than 3-5 years. Similarly,
workplace savings packages is contributing to it.              retirement is often phased, with a gradual move away from
Now it is time to explore how employers can be                 working instead of a ‘hard stop’.
a positive influence on the financial lives of their
employees and help to address the situation.                   At the same time, many face the hardship of finding a way
                                                               on to the property ladder, and those with families often
Acknowledging the behavioural traits that drive and stall      need to think about funding their children’s education, or
saving, employers can begin to think about how to use          purchasing a house in the future.
personalised communication and direction to break the
decision-making paralysis and reinvigorate saving. Then,       Because of this profound change in how Brits work
using what research has revealed about socioeconomic           and live, flexibility must be a natural part of the savings
and lifestyle situations, as well as the sentiment about the   future. It taps into that core desire for choice, but,
purpose of savings, they can consider what kinds of savings    crucially, it does not delay it. Savings flexibility comes
options are fit for their workforce.                           after a choice is made. So instead of not making a decision,
                                                               it is about how best to utilise the results of the decision
A changing savings world                                       that has been made.

If nothing had ever changed about the British working life,    Reward, not risk
people would work for a period of time before fully retiring,
usually for a handful of companies, though in many cases just  Despite the overall need for flexibility, workers will still be
one. In this context, workplace savings are considered to be   looking for savings plans that provide an element of certainty.
solely for retirement, which, in turn, suits the way many use
mental accounting to consider their financial position.        As was detailed earlier in this report, there are fairly high
                                                               levels of risk aversion amongst survey respondents, even if
                                                               lower risk means lower return (Figure 8 and Figure 9).

In reality, our working lives have changed. Dramatically.

Figure 8. A safe and secure, risk-free environment is          Figure 9. I wouldn’t consider investing my money in anything
important to me, even if it means a lower return               risky, even if the alternative means a lower return

60%  60%                                                       60%

50%                                                            50%  56%

40%                                                            40%

30%                                                            30%

20%                                                            20%
                                                               10%
10%                                                                                         14%
 0%
                                     8%                        0%                           Disagree
                       Agree     Disagree                                            Agree

15 The savings psyche of the UK
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