Financial literacy programs benefit employers, employees

Payroll has a role in promoting financial education, say experts
By Sheila Brawn
|Canadian Payroll Reporter|Last Updated: 11/05/2018
Workplaces are an ideal location to teach people about financial literacy, says an expert. Credit: RomanR (Shutterstock)

For many employees, concerns about personal finances can affect their productivity at work, says a recent survey by the Canadian Payroll Association (CPA).

The poll of 5,074 Canadian employees found that 46 per cent said financial stress was affecting their workplace performance.

For those who work in financial literacy, this is not a surprise.

“We know money is a leading cause for concern,” said Jane Rooney, financial literacy leader at the Financial Consumer Agency of Canada (FCAC), an independent federal body that promotes financial education.

“What happens is that that comes into the workplace. Financial stress affects people’s health. They are more distracted at work, productivity goes down, absenteeism goes up,” she said.

Instead of focusing on work, employees with money concerns may spend time worrying about managing their credit cards, paying their mortgage, or saving for retirement.

“These are the kinds of stresses that are on employees that are affecting their performance at work and that are, therefore, affecting profitability of companies,” said Doretta Thompson, director of corporate citizenship at the Chartered Professional Accountants of Canada (CPA Canada).

To counteract this, Rooney and Thompson said employers should find ways to promote financial literacy in the workplace.

The FCAC defines financial literacy as having the knowledge, skills, and confidence to make responsible financial decisions. It can include things such as knowing how to make a budget, pay bills on time, understand how credit cards, bank accounts, and investments work, and save for future goals.

A survey done last year by market research firm Ipsos for found that while more than three-quarters of Canadians said they were financially literate, 57 per cent failed a basic literacy test.

The quiz included questions says it commonly receives on topics such as mortgages, insurance, credit cards, and credit scores.

Rooney said workplaces are an ideal location to teach people about financial literacy.

“If you can reach a group of adults at the same time, with the same messages, with good programs, free and unbiased tools, and bring in experts who are able to answer questions for employees, then we are satisfying the needs of what we are hearing through our research,” she said.

Workplace education programs may also help people be more proactive about their finances, said Thompson.

“They start to understand where they can go for information when they do need it. That’s really important,” she said.

“We know, for example, when people get into trouble with money — they get into debt — it can take them up to five years to seek help and they can be in really, really bad trouble by the time that they actually ask for help,” said Thompson.

“Whereas if we build this community of trust around sharing financial information, the hope and desire is that they will get this information and the help earlier. It will make a bigger difference faster in their lives.”

While some employers may be concerned that employees will see workplace financial literacy programs as an intrusion into their personal lives, Thompson said they should not worry.

“What we know is that that is completely not true. The vast majority of employees would want, appreciate and would participate in financial literacy education from their employers.”

In fact, the CPA (payroll) survey found that 84 per cent of employees would be interested in receiving financial education programs at work.

For employers interested in providing them, there are a number of options, said Rooney, adding that with November being Financial Literacy Month, now is a good time to begin.

“We have great interactive tools on helping people budget. We have a financial goal calculator that can help people understand better savings and debt and what their money looks like. We have a selector tool that can help people identify bank accounts and credit cards that best suit their needs,” she said.

In addition, the FCAC is working on a best practices framework for workplace financial literacy, which it will launch next month. The online framework will provide employers with best practices, tools, and resources to implement financial literacy programs.

“We also have a great tool called the Canadian Financial Literacy Database. It points to other organizations that offer workplace financial literacy content,” she said.

Among those organizations are the payroll association and CPA Canada.

Thompson said the chartered professional accountants’ association has over 6,000 members across the country registered to deliver financial literacy programs on a variety of topics, including saving, financial management, tax strategies, fraud, and retirement planning.

“I think we did over 400 employers last year,” she said. “What we do is put together a collection of our financial literacy sessions and offer them to employers. The sessions all have no cost,” she said.

“Depending on the employer, we can tailor them to exactly what they need,” she said.

An employer’s payroll professionals are another resource, said Janice MacLellan, vice-president of operations at the CPA (payroll).

“The CPA’s 10th annual National Payroll Week employee survey indicates that 44 per cent of Canadian employees still live paycheque to paycheque and one in five could not handle an emergency expense or a delay in their paycheque,” she said.

“Receiving a paycheque that is paid accurately and on time is the cornerstone of financial wellness for an individual.”

“In addition, 84 per cent of payroll professionals spend part of their time educating their employee base on key benefits such as CPP, EI and employer retirement and savings programs, so they appear to be placed in the position of being first responders for some aspects of employee financial education,” said MacLellan.

“They can provide employee education sessions on the upcoming changes to CPP, which is one of the pillars of retirement planning. They can ensure that there are annual employee information sessions on the employer’s retirement or group benefit programs to remind employees of all that is available to them for financial planning.”

In educating employees, MacLellan said payroll professionals should take advantage of tools that the association has created. One is an online video called “Understanding Your Pay,” which teaches employees about the information on their pay statement, including social insurance number, statutory deductions, net pay, statutory holiday pay, and vacation pay.

Another association initiative is “Pay Yourself First,” which encourages employees to have a portion of each pay automatically deducted to go towards things like paying down debt or contributing to savings goals.

“Our survey indicates over 55 per cent of employers have an automatic payroll savings program in place, but only 44 per cent of employees take advantage of them,” she said.

The association has resources that payroll professionals can use to make a case for their employer to set up a program.

Rooney praised the initiative, saying it could be a key message from payroll departments.

“How valuable if you can pay yourself first and not even see the funds,” she said. “You might have those emergency savings that you can draw from as opposed to further credit products and going a little bit further into debt.”

She also suggested that payroll professionals promote financial literacy through their employer’s intranet by providing links to financial literacy content.

“In the federal government, FCAC has worked with our Treasury Board Secretariat and through our payroll folks to highlight links to help people find the content that they need to help them reduce their stress levels,” said Rooney. “They (payroll professionals) have a critical role to play in this space.”

For more information, see:

• Financial Consumer Agency of Canada:

• Canadian Payroll Association:

•Chartered Professional Accountants of Canada:

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