It’s important to give if you want to receive: pensions in the charities sector

Published by Peter Meyler, Martin Willis on

Estimated reading time: 4 minutes


Every year we look at behaviours and attitudes to current and future financial health among the UK working population using our Generation WHY? survey.  In our most recent survey, we spoke to more people than ever before with 3,000 giving us their views.  

This has allowed us to break the results down by industry sector for the first time, and we have been able to compare the views of those working in the charity sector with our wider respondent population.

"The proportion of employees who are single, live alone and work part-time is higher within the charity sector"

In terms of respondents, the main demographic differences between both groups are that there are more charity sector employees who are single (24% v 17%) and fewer co-habiting (9% v 17%). The proportion of part-time workers is also higher (32% v 22%).

This is important as people being at different life stages make different choices about their finance and therefore make different choices over employment. 

Day to day living costs and paying rent/mortgage are the biggest financial priorities in this sector which is in line with the wider UK working population, but building a pension for retirement is less of a priority (36% v 42%).  A comparable proportion are also concerned about clearing and managing debt and the proportion that have never experienced debt is in line with the national picture at around a quarter.

The impact of debt has had a much more significant impact on charity sector employees with 57% struggling to manage it to some degree (+7% points v overall working population), 42% suffering from stress and over a quarter saying that debt has affected their personal relationships, social life and sleep. Interestingly through only 11% say this has had a negative impact on their work which is unusual given the impact on other aspects of their lives. This reinforces the need for support and education for employees in the sector.

 

Despite this, charity sector employees would be more resilient if their earnings were to stop due to an unexpected emergency. 47% could cope using existing funds and savings compared to 42% of all survey respondents. This is despite only 38% saying that they typically plan for medium term financial goals (6% points lower than the wider respondent group).  Only 5% save money in a specialist savings account, with 16% investing in property. Bank accounts continue to be the preferred medium terms savings vehicle for two thirds of those working in this sector.

 

When thinking about their long term futures and retirement, employees in the charity sector are more likely to work beyond age 65 than those working in other sectors (45% v 41% overall) and only 5% plan to stop working completely during retirement compared to almost one in five of all respondents. Only one in five have not considered what they will do in retirement (v over one in four overall) with 28% planning to do further voluntary/community work.

"The impact of debt has had a much more significant impact on charity sector employees with 57% struggling to manage it to some degree "

In terms of funding their retirement plans, charity sector employees have a more accurate knowledge of the level of contributions than our overall respondent population with 28% (v 21% overall) having a combined employer and personal contribution of between 0-5%. At the other end of the contribution scale there is a significantly higher proportion (28% v 14% overall) with a combined contribution of between 11% and 15%, but only 3% have a contribution in excess of that compared to 9% of all respondents.

They also clearly understand the importance of increasing their pension contributions with 62% saying they will contribute more in the future if they can afford to. 39% believe that a contribution of between 11% and 20% is required to provide them with a level of income they will require in retirement, compared to 32% of overall respondent population. This is probably as a result of having a better understanding of the communication they receive from their pension provider.

Four in ten charity sector employees see savings also contributing to their eventual retirement income, followed by inheritance (34%) and property investment (30%).

Employee loyalty is much higher in the sector with a quarter saying that they wouldn’t leave their current employer regardless of any salary increase being offered by another company, compared to 19% overall. 27% would leave for a salary increase of between 6% and 10% and 19% would leave for an increase of between 3% and 5%.

So what can charity sector employers take from these findings?

Clearly, employees working in the sector are a loyal bunch.  They enjoy this type of work, and their heads are not easily turned by the offer of more money elsewhere.

However, some are struggling financially and have debt.  Employers need to consider how they support them as this causes stress and affects their personal relationships, social life and sleep.  When was the last time you reviewed your benefits offer to ensure it provides benefits that were valuable to and valued by employees?  Do you have an Employee Assistance Programme (EAP) and how effective and well utilised is it?  Do you provide financial education that helps employees to manage their finances effectively and efficiently?  Do you provide managers with the training and skills they need to support their people in the right way?

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