Employers must educate staff on financial risk - Demos

The think-tank's latest report, supported by Income Protection specialist Unum, found employers could help to tackle growing financial insecurity in the workforce, yet many are reluctant to engage with employees about financial risks.

Demos said this is down to a fear of bureaucracy, as well as confusion about the difference between explaining the availability and usefulness of products like Income Protection, and delivering ‘financial advice' which most employers are not qualified to give.

The report found that we must be clear about the role employers can and should play in building financial resilience in the workforce and in ensuring those who behave responsibly will not be unfairly penalised.

Duncan O'Leary, Research Director at the think tank Demos, said:
"Awareness of the financial impact of long-term illness, and the sorts of protection that can help guard against this, remains dangerously low. Employers can and should play a vital role in educating staff about the risks and facilitating access to financial protection through workplace benefit schemes - and they should be able to do so without fear of being penalised."

Other recommendations of the report were:

• The Government should explore using the NEST auto‐enrolment pension scheme to alert workers to wider financial risks. Employees should be reminded in their annual pension statements of the risk of long-term illness and the amount of their current entitlements.

• The insurance industry should work with other potential partners - such as trade unions or membership organisations like the National Trust and Neighbourhood Watch - to create new points of access to group products.

1 in 10 people will go on long-term sick leave during their working lives, yet Demos found 58% of employees currently underestimate the risk of this happening. Half have less than one month's salary saved and only 11% have an Income Protection product designed to safeguard our living standards.