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The Big Freeze: Financial Planning & Employee Pay Setting

Posted in Candidates, Employers on Mar 08, 2011 by Richard Hayden

With the financial year coming to an end in April, and many employers reviewing budgets we decided to review the difficult subject of salaries, pensions and employee wage setting.


 

Recent  data from the Incomes Data Services has revealed that the median pay award for the last quarter of 2010 rose to 2.8% from 2.2%. However this was countered by the retail price index which in January surged to 5.1%, while consumer inflation (which does not include housing costs) likewise rose by 4%, double the target set by the Bank of England.

 

This indicates as Mervyn King, the Governor of the Bank of England has suggested that real wages are likely to be no higher in 2011 than they were in 2005, which means that pay has in effect been subject to a six-year freeze, the most prolonged squeeze on purchasing power since the 1920s.

 

It comes as no surprise then at such a difficult time for employees and employers alike that the recent report by the IFR (Insights into Financial Responsibility) shows that “Eight in ten employers feel responsible for their employees’ financial security”.

 

What may come as more of a surprise though is that when asked about support with financial planning, three-quarters of employees (75%) stated they would value more help from their employer.

 

Gerry O’Neill, managing director of corporate solutions at Standard Life, said:

“What is clear is that since the downturn, employers feel more responsible for their employees' financial security and employees in turn are looking to their employers for help with financial planning.

“Interestingly, employers seem to think they are doing a good job when it comes to communicating with staff. This is not the view of many employees and shows that more needs to be done to increase volume and improve quality of communication, in particular around financial issues and the benefits available.

“Against the backdrop of a reduction in government support and the closure of final salary schemes, it is critical that employers take on a new active role in helping their staff plan for the future.”

 

In the current financial climate financial planning is an asset not just a benefit and can greatly improve your employees well being, productivity and loyalty.

 

If you would like further information or help with financial planning Key Appointments can provide expert industry contacts who will be happy to provide advice and guidance on these matters.

At Key Appointments we want to supply you with relevant and useful information, if there are topics you would like more information on then please email us at info@key-appointments.co.uk


 

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