A growing interest in employee financial well-being in India

A growing interest in employee financial well-being in India Insights from the Global Benefits Attitudes Survey 2016

Indian employees satisfaction with their financial state today belies financial worries that a majority of them have about current and future finances.

A growing interest in employee financial well-being in India Insights from the Global Benefits Attitudes Survey 2016 Table of contents About the survey...4 Executive summary...5 Pessimism over long-term financial well-being...6 Why should employers be concerned about employee financial well-being?...7 Financial priorities and retirement benefits...10 Are employees on-board for a broader employer role?...12 A way forward in technology...15 The way ahead... 18 3 A Growing Interest in Employee Financial Well-being in India

About the survey For over the past 10 years, Willis Towers Watson has surveyed employees about health and retirement. Our Global Benefits Attitudes Survey fielded across 19 countries is the second globally consistent survey, and our third survey in India since 2012 that collates this rich information on health and retirement. This paper specifically focuses on the survey results for India. This survey was fielded across the country for the period between June and August 2015, eliciting 2003 responses. It includes representative samples at non-governmental employers. The survey questionnaire covers the following areas: Employee effectiveness: where we ask questions around employee engagement at work, absence, productivity and stress. Financial security: where we explore employees financial situation, their money worries and how they deal with finances; we also explore their confidence in their retirement, their benefit preferences. Health and well-being: where we ask questions around employees, health status and risks, the role of employers in health and well-being, and some questions around health plan design, incentive and employee behaviours, including programme participation. Our employee research is complimented by our Willis Towers Watson Staying@Work 2015/16 survey, which examines similar issues from an employer perspective. For nearly two decades, we have conducted Staying@Work research in North America. The 2015 Survey is our second global study of employers health and productivity strategies, involved 34 markets, including the Middle East. It covers 43 employers in India with nearly 390,000 employees. 4 willistowerswatson.com

Executive summary Our 2016 survey explores a broad range of issues concerning employee benefits, health related behaviours, current and prospective financial situations and work experience, of which financial and retirement security are an inextricable component. Our key findings are: Indian employees satisfaction with their financial state today belies financial worries that a majority of them have about current and future finances; Employees issues tend to cluster, those in poor health also tend to have financial worries and be less engaged with their work; Employers are concerned about these issues, which create a drag on productivity; Employers have already taken steps to ensure their employees financial well-being, with a pipeline of similar initiatives over the next few years; Employees now consider financial and retirement security a priority and recognise the importance of employer-based retirement benefits; Employees in India are in favour of their employers playing an active role in their health and retirement as well as in their personal finances; Employees are interested in wider benefit choices that address their diverse needs and priorities; and Technology presents an opportunity for employers to engage employees and help them manage their finances and retirement savings. 5 A Growing Interest in Employee Financial Well-being in India

Pessimism over long-term financial well-being With India having the highest growth rate among the world s major economies, employees satisfaction with their financial situation has increased 9% since 2013, to reach 65% of employees surveyed. Figure 1: Employees long-term concerns My generation is likely to be much worse off in retirement than my parents generation are/were However, this apparent satisfaction belies the fears that employees harbour towards their current and future state, especially in retirement. A majority (56%) of Indian employees fear that they will be worse off than their parents in their retirement (Figure 1). These financial concerns cast doubt on their confidence in saving enough money to see them through their retirement (Figure 2). With the expected retirement age slowly creeping upwards, a growing proportion of employees expect to work through their sixties to meet their financial obligations. 66% Global India Even when questioned about their current financial state, almost half (46%) the employees surveyed express concerns, with two-fifths (37%) worrying about their debt, and 1-in-3 stating that their financial problems negatively affect their lives. 56% Figure 2: Worries about retirement adequacy 0% 20% 40% 60% 80% 100% I often worry about my future financial state 47 Lack of confidence in having sufficient retirement resources - 15 years into retirement 34 22 Lack of confidence in having sufficient retirement resources - 25 years into retirement 32 54 53 Global India 6 willistowerswatson.com

Why should employers be concerned about employee financial well-being? Financial concerns take a toll on employees and hamper their productivity at the workplace. Willis Towers Watson has profiled the surveyed employees based on their financial worries into four categories, as seen in Figure 3: those who were Unworried, those with Future Worries (those worried about their ability to afford retirement), Current Worries (those with concerns about their finances in the short term but who feel confident of being able to afford retirement) and the Struggling (those who have both short- and long-term concerns). Among the struggling employees, 75% admit to above average or high stress. In contrast, the same is true for less than 2-in-5 employees in the unworried group. Figure 4 shows how stress and workplace engagement are linked to financial concerns. Within the struggling group itself, 34% admit to being in very good health, whereas this figure increases to nearly 3-in-5 in the unworried group. At the workplace, struggling employees are 1.4x more likely to suffer from presenteeism at work than their unworried counterparts. All of these factors have an impact on the performance of employees at the workplace. On average, about 52% think that employees are less effective at their work due to financial problems. Figure 3: Categories of surveyed employees Unworried Future worries Current worries Struggling Employees are not worried either for the short- or long-term 47% Employees experiencing long-term worries only 16% Employees experiencing shortterm worries only 25% Employees worried about both, the shortand long-term 12% 7 A Growing Interest in Employee Financial Well-being in India

Figure 4: The links to poor health and productivity Stress Percentage in above average or high stress 0% 20% 40% 60% 80% 100% Unworried 38 Future worries 53 Current worries 62 Struggling 75 Unworried Future worries Current worries Struggling Productivity and engagement Absence 4.5 days 4.0 days 6.3 days 5.5 days Presenteeism 9.5 days 10.3 days 9.4 days 13.2 days Unworried Future worries Current worries Struggling 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% Highly engaged 66 Highly engaged 44 Highly engaged 71 Highly engaged 43 Unsupported 15 Unsupported 26 Unsupported 14 Unsupported 24 Detached 11 Detached 17 Detached 10 Detached 19 Disengaged 8 Disengaged 13 Disengaged 5 Disengaged 14 Sample: All employees 8 willistowerswatson.com

When comparing struggling to unworried employees, it becomes clear how these financial worries affect the workplace. We find that struggling employees are: Twice as likely to report high personal stress; 1.5 times more likely to report poor health; Likely to lose almost 5.5 days of work each year; and Twice as likely to leave for another job. Figure 5: Age and gender split among different categories of respondents Gender 0% 20% 40% 60% 80% 100% Male 46 16 27 12 With these clear links to high levels of stress, poor health, higher turnover, lower engagement and productivity, it is not surprising that employers would want to be involved. Female 49 15 23 13 To be able to help their employees, employers first need to identify these at-risk segments and understand their needs (Figure 5). Across both genders, we see that there is only a marginal difference in the composition of employees among the four categories. Those aged 50 and above are typically (76%) unworried about their current and future financial situation; this figure reduces to 46% among those in their 40s and by another 3% for those in their twenties and thirties. However, 4% of employees are struggling in the 50+ category and 14% in the less than 40 category. Age 0% 20% 40% 60% 80% 100% 50+ 76 10 10 4 40-49 46 16 28 10 Less than 40 43 16 27 14 We also see that employees concerned about the future, i.e., those who are struggling and those with future worries, are less likely to be members of their employers retirement plan (Figure 6). Unworried Future worries Current worries Sample: All employees Struggling Figure 6: Correlation between salary, financial priorities and retirement and benefits plans Unworried Future worries Current worries Struggling Average salary 1,453,867 1,342,394 1,828,297 1,146,805 % have children aged less than 18 60% 58% 66% 60% % member of employer retirement plan 43% 28% 59% 32% % member of employer health plan 74% 76% 80% 71% Sample: All employees 9 A Growing Interest in Employee Financial Well-being in India

Financial priorities and retirement benefits We also find that these employees who are concerned about the future are more likely to say that their employer retirement and health plans do not meet their needs, and be less satisfied with their pay and bonus (Figure 7). Our survey results also suggest that 1-in-4 employees, when asked about their top priorities, prefer superior retirement or health benefits to pay and bonus, and more than 2-in-5 would prefer some alternative to pay and bonus. Given an allowance to spend on benefits, we see that even the current worries and struggling groups would allocate almost a fifth to retirement benefits, whereas all the other two groups would allocate close to a quarter to this important benefit. Employees across all age groups list retirement savings in their top three financial priorities. It is third for employees in their 20s, and rises to second priority for those in their 30s and 40s, after children s expenses, and is the top priority for those in their 50s and over. Although retirement savings are important, we have seen that there are often other priorities for younger groups (Figure 8). Our survey results also suggest that 1-in-4 employees, when asked about their top priorities, prefer superior retirement or health benefits to pay and bonus, and more than 2-in-5 would prefer some alternative to pay and bonus. Figure 7: Employee attitudes towards employer benefits packages Unworried Future worries Current worries Struggling Satisfaction with: Pay and bonus 68% 48% 77% 39% Retirement plan 74% 51% 84% 61% Health care plan 76% 68% 86% 63% Meets my needs: Retirement plan 74% 47% 88% 61% Health care plan 64% 48% 76% 49% Sample: All employees 10 willistowerswatson.com

Figure 8: Employees financial priorities Rank 20s 30s 40s 50+ 1 Saving for retirement 2 Children expenses 3 General saving 4 Housing 5 General costs Sample: All employees 11 A Growing Interest in Employee Financial Well-being in India

Are employees on-board for a broader employer role? Figure 9: Employer initiatives towards promoting financial well-being 0% 20% 40% 60% 80% Bring third party vendors onsite as counsellors/educators to promote financial well-being 41 21 15 Include financial well-being as a key part of your overall workforce well-being strategy 34 15 17 Deliver customised or targeted messages to help improve financial well-being 13 29 21 Offer a comprehensive programme of tools, seminars and education 15 23 23 Offer or promote use of technology-based resources 17 25 17 Include financial well-being module or questions in your health risk assessment/appraisal 14 24 16 Use financial rewards for individuals who participate in financial well-being activities 3 25 19 Offer or promote use of call-center resources 3 24 5 Action taken/ Tactic used in 2015 Planning for 2016 Considering for 2017 or 2018 Employers recognise that there are opportunities for them to play a role. The Willis Towers Watson Staying@ Work 2015/16 study shows that about one-third of Indian employers have made financial well-being a key aspect of their well-being strategy, pointing to how this is seen as an integral element of an employee s overall well-being. In 2015, 41% of employers collaborated with third-party vendors to promote financial education a trend that is expected to grow to reach 77% of employers by 2018 (Figure 9). The biggest growth in promoting financial well-being in India will be in the use of customised and targeted messages, where 50% of employers intend to do so over the next three years, on top of the 13% currently doing so. Also, 46% of employers intend to offer a comprehensive suite of tools, seminars and education that cover budgeting, planned large purchases, debt reduction, wealth accumulation, protection/insurance and tax assistance/advisory by 2018. When asked about whether employers should have a role, Indian employees supported the idea that their employer should have a role in encouraging them to a) save for retirement (57%), b) lead healthy lifestyles (69%) and c) better manage their finances (65%), with fewer than a third against such a role for employers in any of these areas (Figure 10 and Figure 11). Therefore, our research indicates that Indian employees seem to be comfortable with their employers involvement. 12 willistowerswatson.com

If you were offered the following choices, which would you prefer? Figure 10: Employee attitudes towards employer involvement in their retirement and health Retirement Health Employers should actively encourage employees to save for retirement Employers should provide a basic retirement plan and let employees do the rest Employers should take an active role in encouraging their employees to live a healthy lifestyle It is not the role of an employer to encourage their employees to live a healthy lifestyle Strongly prefer Prefer Slightly prefer Neutral Slightly prefer Prefer Strongly prefer 30% 30% 32 69% 20% 26 57% 20% 24 19 10% 0% 12 11 10 12 10 10% 0% 13 14 8 6 3 Sample: All employees Figure 11: Employees attitudes towards employer involvement in their finances and targeted messages Financial issues Targeted messages Employers should take an active role in encouraging their employees to better manage their finances It is not the role of an employer to encourage their employees to better manage their household finances I am comfortable if my employer sends targeted messages to employees with financial issues It is not the role of an employer to send targeted information to employees who are not saving enough Strongly prefer Prefer Slightly prefer Neutral Slightly prefer Prefer Strongly prefer 30% 20% 28 23 65% 30% 20% 50% 32% 18 18 18 10% 0% 14 13 9 8 5 10% 0% 14 11 11 10 Sample: All employees 13 A Growing Interest in Employee Financial Well-being in India

For employers to move beyond their conventional role and intervene to support their employees, a one-sizefits-all approach cannot be adopted consistently across all organisations as a solution. Instead, employers need to plan their steps and customise their offerings to different segments within the workforce based on their requirements, as we have seen in the profiles discussed above. However, as seen in Figure 11, there is some resistance to employers taking a very interventionist role with 32% of employees saying they are not comfortable receiving targeted messages from employers. Nevertheless, half are comfortable with such messaging. Coupled with the increased importance of financial and retirement security to Indian employees over the past few years (Figure 12), this suggests an opportunity for employers to help their employees. Still, employers will have to carefully identify the groups that are resistant to their intervention and enable them to deal with their financial issues on their own. Figure 12: Increased importance of financial and retirement security Unworried Future worries Current worries Struggling My financial security has become a more important issue for me over the last two or three years 67% 73% 90% 90% My retirement security has become a more important issue for me over the last two or three years 59% 60% 81% 65% Note: Percentage agree or strongly agree Sample: All employees 14 willistowerswatson.com

A way forward in technology Indian employees are tech-savvy and have embraced technology in their daily lives in the form of mobile apps. They have been quick to adopt online tools and financial apps to help manage their finances and retirement savings. These include banking and bill paying apps, price comparison sites, investment trackers and budgeting tools for personal finances (Figure 13). For retirement savings, the tools include savings and adequacy trackers, online advice and online forums that provide financial information and advice and discuss retirement issues (Figure 14). A large proportion of the employees surveyed find these tools useful and important, and this is across all types of employees, from the unworried to the struggling. What is interesting is that the current worries group and the struggling place more weight on the importance of these tools in helping them manage their finances and retirement savings. As discussed earlier, about 2-in-5 employees would prefer alternative benefits to pay and bonus (and 1-in-4 would prefer retirement and health benefits to pay and bonus). Providing some technological solutions (tools and apps) as part of their core benefits offerings may go a long way in helping employees. 15 A Growing Interest in Employee Financial Well-being in India

Figure 13: Employees use technology to manage their personal finances Unworried Future worries Current worries Struggling Banking and Bill Pay: Mobile device apps to monitor banking accounts and pay bills 20 47 19 46 31 49 19 50 Price Shopping: Online price comparison sites to shop for the best deals 27 47 21 50 32 51 23 51 Investment Tracking: Tools to manage and track financial investments regularly 19 52 15 40 32 47 16 47 Household Budgeting: Budgeting tools to help me monitor my household spending 18 41 13 34 31 48 16 38 Online Advice: Financial advice websites 13 42 11 35 29 48 14 36 Online Forums: Online forums that discuss financial issues 12 42 11 38 29 47 12 45 Sample: All employees Very important Important Figure 14: Employees use technology to manage their retirement savings Unworried Future worries Current worries Struggling Savings Tracker: Tools to manage and track the value of my retirement savings 22 50 19 46 28 51 19 54 Adequacy Tracker: Tools to help me monitor when I can retire/project how much I can 16 48 10 44 27 49 14 48 expect in retirement Online Advice: Financial advice websites 14 47 12 37 29 47 11 41 Online Forums: Online forums that discuss retirement issues 13 42 16 32 26 50 9 47 Sample: All employees Very important Important 16 willistowerswatson.com

Employees in India favour employer involvement in encouraging them to better manage their finances and to encourage them to save for their retirement, beyond simply providing a retirement plan. 17 A Growing Interest in Employee Financial Well-being in India

The way ahead As employers understand the connection between their employees well-being and their performance and productivity at work, and how this affects the organisation s bottom line, and that issues of health (physical and mental), financial well-being, engagement and absence cluster, they will realise that a holistic approach is needed to address these issues effectively. On the issue of financial well-being, companies are beginning to take steps by making their employees financial well-being a core component of their overall well-being strategy and employee value proposition. Employees in India favour employer involvement in encouraging them to better manage their finances and to encourage them to save for their retirement, beyond simply providing a retirement plan. Our research suggests that there is an opportunity to boost engagement and productivity by reconfiguring the benefit package offered by employers. Different employee segments may require a different mix of benefits that depend on their financial priorities at their given stage in life. Employers should aim to help employees address their different issues, from shortto medium-term savings, through to the traditional longterm retirement savings. Sponsor new technology. As employees embrace emerging technologies, there is an obvious opportunity for employers to leverage this to help employees manage their household finances and retirement savings. However, employers will need to find a way so employees are not overwhelmed by choice and are not pushed into making choices that are not necessarily most beneficial to them. Project team Kulin Patel Director Willis Towers Watson Kulin.Patel@willistowerswatson.com Zaki Zahran Senior Economist Willis Towers Watson Zaki.Zahran@willistowerswatson.com Employers should use segmentation to identify the needs of different groups and to provide targeted solutions to meet those needs. Different groups in any organisation (whether by age, financial worries or groups in favour or against employer intervention) have different financial priorities and emphasise retirement savings at different times of their lives. As a result, they would have different benefit preferences. Retirement education to remain top of mind. Among all the benefits employers can offer, retirement benefits will remain a top priority for employers. However, employees are open to more than just the provision of retirement plans, and offering employees retirement education would help them with their long-term financial well-being. Personalisation when communicating with employees and using appropriately targeted messages would increase employee engagement with the offering provided by the employer to enhance employee well-being. However, there may be some employee sensitivity regarding the use of targeted messages, and employers should take care not to alienate resistant groups. 18 willistowerswatson.com

About Willis Towers Watson Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 countries. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com. Copyright 2016 Willis Towers Watson. All rights reserved. WTW-GL-16-RES-1752h willistowerswatson.com