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Five years to retirement – workplace programs make it less abstract

Frank Wiginton, CEO of Employee Financial Well-Being, says financial education programs can help lower employee stress.

As employee health and wellness programs become the norm at an increasing number of companies, a new and equally useful wellness component has been making its way into the Canadian workplace. Help with financial health is now being offered to ever larger numbers of workers – especially those approaching retirement.

"If you were spending money on wellness programming, and not delivering a financial wellness component," said Frank Wiginton, chief executive officer of Employee Financial Well-being, "your other wellness programs aren't performing as well as they could be."

For the past five years, his Toronto-based consultancy has been providing financial education programs to the employees of organizations as varied as Export Development Canada, McMaster University in Hamilton and the Toronto Transit Commission.

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"If we are not addressing the money issue, we are not addressing the root cause of stress," he said.

A Manulife survey conducted last year by Environics Research found that only 22 per cent of Canadians between the ages of 55 and 65 felt they were on track to achieve their retirement goals.

Manulife is just one insurance company that, along with pension fund management, is offering its clients workplace financial wellness programs. It rolled out a pilot program with seven companies last year, is currently offering it to nine, and has 11 more "in queue," said Sue Reibel, executive vice-president and general manager of institutional markets at Manulife.

Its interactive digital retirement platform, Retirement Redefined, is geared to employees who are about five years from retirement, she said.

"Our research showed that this is the point in time when people start seriously thinking about all of the aspects of retirement, and really need that help. A lot of people have no idea how much money they need because they don't know what they are going to do."

Its platform includes online questionnaires, Web seminars, tools and calculators, and one-on-one advice from certified financial planners. There is no cost to the employee, only to the company that has hired Manulife to deal with its group pension funds. Because Retirement Redefined is so new, the company hasn't worked out yet how it will price it when it goes beyond their bloc of group retirement clients.

All the personal information the user enters is completely confidential, Ms. Reibel emphasized. "Your employer does not see it at all," she said. "The only thing the employer sees is the number of employees who are participating in the program."

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Previously, retirement planning has been pretty much entirely focused on investing, she added. "It was very narrow and didn't look at the whole person. But you really need to support and understand the person to help somebody live a better retirement."

Helping people reach important financial life goals through workplace financial wellness programs benefits both companies and employees, said Nadia Darwish, vice-president of development, marketing and investment strategy at Desjardins Group, where they have been offered since 2013.

"They give employees access to financial education and guidance, and they also have the ability to improve overall employee financial well-being," she said. "We have seen a number of studies that would indicate that financial wellness programs can reduce overall financial stress and, just as importantly, increase retirement readiness."

While most of those studies have come from the United States, the trend is growing in popularity in Canada as well. "Today, many Canadian employers are actually considering adding a workplace financial wellness program, or have recently done so," said Ms. Darwish.

"It gives employees a good feeling about the company they are working for, but it's also an opportunity to leverage the programs employers are extending, allowing us to focus not only on retirement readiness, but also making sure that people have the financial basics in terms of budgeting and debt management."

Mark Thompson, professor emeritus of organizational behaviour at the Sauder School of Business, also likes the financial wellness idea. "If a company administers a pension fund themselves, then it is in everyone's interest to make sure people know what their rights are, what they are going to get, or not going to get, particularly if their benefits change after retirement – which is normally the case."

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"It's really important that employees understand the benefits that are available to them," Ms. Darwish agreed. "They should be making sure that they understand the value of maximizing the employer contribution, and not leaving any dollars on the table."

While workers of all ages have been showing a sharp interest in financial education, so far, most of the programs in Canada target that bulge of baby boomers who will soon be accessing their pensions.

According to Ms. Reibel, there is a good reason for that. Not only is retirement starting to seem less abstract to that demographic, but they have more disposable income at hand. "People are generally in a better spot to put away money at that time than they were when they were 45, for example, because they still had kids in university, or a mortgage," she said. "This is when they realize that they need to seriously readjust."

Even for the three-quarters of workers who are offside in their retirement planning, "there is opportunity," she added, to set financial goals for the future.

The insurance firm now plans to offer its Retirement Redefined scheme to all of its group benefit clients. "We are also looking at expanding it to all of our customers in Canada," said Ms. Reibel, "and then eventually direct to consumer."

Financial stress

– In Canada, 51 per cent of women and 40 per cent of men say they are losing sleep over financial worries, according to a 2014 poll conducted by Leger for the Financial Planning Standards Council.

– A more recent online poll carried out by Leger for Quickcheck Canada found that 66 per cent of Canadians said money was a stressor in their lives, while 44 per cent said it was their greatest source of stress.

– Eighty-seven per cent of Canadians told Leger they wished they had made better financial decisions earlier in their lives.

– In the United States, with its anemic wage growth and shrinking company-provided safety nets, financial stress affects 80 per cent of U.S. workers, according to financial-education firm Financial Fitness Group.

– A Conference Board of Canada report released last year found that 40 per cent of respondents did not know how much they would need to save for retirement, while one in five admitted that their financial literacy skills were either below average or poor.

– Employees experiencing financial stress spend almost an hour a day dealing with money matters while at work, according to Consumer Credit Council Services. Employees with money troubles are also absent from work more often.

– Individuals who report financial distress also report higher levels of health problems, according to a 2009 AP-AOL health poll, with 29 per cent suffering from anxiety, 23 per cent from severe depression, 26 per cent from ulcers and digestive tract problems, and more than half – 51 per cent – from muscle tension, including lower back pain.

– Meanwhile, the Personal Financial Employee Education Fund, a U.S. and Britain-based organization that advocates for best practices in workplace financial wellness programs, has found that a financially healthy employee can save employers up to $2,000 a year through increased productivity and reduced health-care costs.

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