Martha How, principal at Aon Employee Benefits
With workplace wellbeing and pensions initiatives now commonplace, we should all be feeling a bit healthier and wealthier. But, while some of us may have got the exercise or pension bug, unfortunately our data suggests that, overall, there's been very little improvement in either of these factors in the UK.
On the health side, our 2016 Global Medical Trends Report shows that employers' medical costs continue to rise faster than inflation, up 9.1% in 2016 compared to a general inflation rate of 3.6%. Perhaps this isn't so surprising when health risk factors are also on the up. Obesity rates among UK adults increased from 15% in 1993 to 26% in 2014 according to the NHS. Similarly, it reports that just 36% of adults manage to rack up the bare minimum of 30 minutes of moderate activity a week.
UK employees' pension provision is also pretty poor. Although auto-enrolment has given more employees access to pensions, our research found that 85% of people are saving less than 10% of their salary and 55% intend to rely on the State pension as one of their main sources of retirement income. A further 45% of people said they can't afford to save more. Given that average UK household disposable income has risen over the last few years - up 8.4% between 2002 and 2014 according to Government figures - it's concerning that pensions aren't benefitting from this increase.
Well aware of the concerted efforts being made by employers to improve employee health and wealth, I decided to explore the connection between these two factors to determine whether we need to change our approach. I have to admit that some of the data really shocked me. Dataset after dataset indicated a strong correlation between low income and poor health. Many of us, especially where income is low, whether now or in retirement, are sleepwalking towards a future of poor health.
Low wealth, poor health
Take the figures from the Office for National Statistics (ONS) on avoidable deaths. These are deaths due to infections, neoplasms, drugs and alcohol, cardiovascular disease, respiratory disease and injury - many of which are directly related to lifestyle.
Comparing these figures against gross disposable household income on a regional basis shows that, as earnings increase, avoidable death rates reduce. For example, in the North East, which had the lowest average gross disposable household income of £15,189, the avoidable death rate is the highest at 279.2 per 100,000 people. At the other end of the income scale are London and the South East with figures of £23,607 and 204.6 avoidable deaths and £20,434 and 190.1 respectively.
Further support for the connection between health and wealth is evident in the smoking figures published in the ONS's Opinions and Lifestyle Survey. While 23% of people earning less than £10,000 smoke, just 11% of those earning more than £40,000 smoke. Given that smoking is the highest risk factor for cancer - responsible for approximately 22% of cancer deaths - this link between smoking and income is concerning.
With government campaigns often failing to change behaviour, employers have an important role to play in providing the health education that can turn these figures around. Indeed, 93% of UK employer respondents to our EMEA 2016 Health Survey agreed that they were responsible for influencing employee health, including their financial wellbeing, and changing behaviours.
Offering a health and financial wellbeing programme that suits your employees and addresses the specific challenges they face is essential, enabling them to make the lifestyle changes that will help them secure a healthier and wealthier future. It's not always easy to secure the necessary budget for this, especially as employees may only feel the full effects of your programme long after they've worked for your organisation.
However, there are also benefits for employers. Improved productivity, reduced sickness absence and, as a result of fewer claims, more sustainable medical cost inflation all stem from improvements in employee health. This becomes particularly important when a growing number of employees are staying in the workforce well into their 60s, 70s and beyond.
For some employers, it may also pay to look at the Government's track record in this area. While many of its public health messages have had limited impact, its approach to smoking has had a much more dramatic effect. By adopting a hard-hitting approach, as seen in the horrific photos on cigarette boxes and the gritty anti-smoking adverts run in recent years, along with the ban on smoking indoors and higher taxes, it has successfully reduced smoking rates in the UK.
Explaining to employees what their retirement might be like, both financially and in terms of their health, if they take no personal responsibility for wellbeing and rely solely on the NHS and State pension, could be the wake-up call that's required.
Download the Wellbeing: Examining the correlation between employee health and financial wellbeing white paper