A new partnership between Animas Centre for Coaching and Octopus MoneyCoach 

We’re on a mission to give more people someone they can talk to about money.

Every day, our money coaches bring together the power of transformational coaching with the expertise of a financial planner to transform the lives of their clients. To create long-term financial wellbeing, we believe in helping clients connect their financial goals to their individual beliefs, values and purpose.

That’s why, we’re excited to announce a new partnership with Animas Centre for Coaching, opening up access to our training to some of the UK’s best life coaches, executive coaches and more.

Animas is a leading coach training school, training coaches in the UK and internationally. They have trained over 3,500 coaches across the world and graduates coach in every area of life and work, including life coaching, executive coaching and employed internal coaching.

Through this partnership, we are giving Animas graduates another route to develop and extend their practice through our own free training programme. Our programme has been independently certified by the London Institute of Banking and Finance and the Initiative for Financial Wellbeing.

Money touches all aspects of our lives – work, family, relationships and more – and this partnership helps us give even more coaches the tools to support clients to create the lives they want for themselves and their families.

Curious about whether becoming a money coach could be right for you? Take our quiz and find out!

Hear how financial coaching came to life within a socially responsible business

Certified B Corps are leaders in the global movement for an inclusive, equitable, and regenerative economy.

So, we wanted to find out how they make mental and financial wellbeing central to their strategy and what others can learn for their own businesses.

Hear from Chris Sheard, Owner and MD of SR2 Recruitment about their lessons learned bringing mental and financial wellbeing to life, and measuring the positive impact.

Learn practical tips that you can use to progress your company’s

Octopus MoneyCoach is excited to announce that its financial coach training programme has been accredited by two professional third parties.

The London Institute of Banking and Finance (LIBF) and the Initiative for Financial Wellbeing (IFW) have both given Octopus MoneyCoach their seal of approval, making it the first financial coaching programme in the UK to be externally accredited.

Caspian Paget, head of coach excellence at MoneyCoach, calls it “a big step forward”, adding: “This is the first time a UK financial coaching programme has been accredited to these standards. The IFW and the LIBF reviewed everything – our approach, every step of our curriculum, our assessments and all of our policies.”

To become a coach with Octopus MoneyCoach, applicants must complete a training programme, which has been developed internally by the company.

“As the leading financial coaching brand in the UK, we believe being accredited will be the start of an industry-wide standard for financial coach training,” says Shah Abbasi, head of coaching at Octopus MoneyCoach.

Financial coaching requires different skills from regulated financial advice, and high standards of training are essential. Often, coaching is about changing people’s relationship with money, and tackling topics such as motivation, goal-setting and emotional spending. This is in addition to discussing how an individual can maximise and protect their money by budgeting and saving, investing and utilising pensions.

“It’s incredibly important that any financial coach you work with has gone through an accredited programme,” comments Paget.

Who are the LIBF?

Set up in 1879, the London Institute of Banking and Finance is one of the oldest training and professional bodies for financial services.

It runs numerous courses of its own, including financial education qualifications for school students, and the Certificate in Mortgage Advice and Practice (CeMAP), a widely-held qualification by mortgage advisers.

What our training looks like

The Octopus MoneyCoach training programme is a unique mix of theory learning, practical learning and group learning.

First, applicants go through a formal application process. As well as background checks, there are also competency tests ranging from communication skills to financial knowledge.

Once accepted onto the programme, coaches then have to complete 150 hours of training. It’s a combination of classroom-style learning (on topics such as budgeting, savings and pensions) and practical application. The latter includes practice coaching sessions with volunteer clients, which are individually monitored by a head coach with detailed feedback provided.

Further assessments were recently added to the training, including a written assessment to test client scenarios that may not come up in practice calls.

“It’s a rigorous programme – not everyone gets into it and not everyone gets through it,” comments Paget.

A dedicated head coach team mentors the trainees. They listen to every client call: trainees complete a call, they get feedback, and then they immediately implement the feedback.

The ongoing feedback loop helps build momentum and cements the learning.

Trainee coaches become accredited by Octopus MoneyCoach when they have completed the training, their practice client calls are rated “excellent” across all the standards by both a head coach and the head of financial coaching or coach excellence, and they pass a written assessment that tests their technical financial knowledge.

What qualities does a financial coach need?

As well as financial knowledge and expertise, coaches need excellent interpersonal skills. Deep, active listening is required to help clients feel safe and comfortable.

Coaches should connect financial education to clients’ personal goals so it feels relevant to them; in other words, teach them about money management and trickier subjects like pensions and tax in a personalised way.

At Octopus MoneyCoach, financial coaches help clients shape their goals, and help them follow through on their intentions, such as by creating a budget or dealing with debt. Questions like “how do you want to take that forward?” and “what’s holding you back from XYZ?” encourage clients to engage and take ownership of their finances.

Coaches also help clients deal with personal blockers, such as emotional spending or actually giving them the permission to spend.

Why it’s important for training to be accredited

Having the Octopus MoneyCoach training officially accredited by a professional third party is an exciting step forward for the entire financial coaching industry.

It’s important because it’s hard to deliver good coaching and there are still no set standards for the industry. Now that there are more financial coaches than ever before, it’s crucial for clients to know they can trust their coach. 

Octopus MoneyCoach is proud to be leading the way when it comes to world-class financial coach training.

Curious about whether becoming a money coach could be right for you? Take our quiz and find out!

The business case for financial coaching looks different for every employer. You might be looking to improve the overall financial health of your employees, or improve productivity and employee satisfaction, or improve your talent brand externally. 

The good news is that the benefits of financial coaching are wide and offering it to your employees can have a meaningful, positive impact across lots of areas for your people and your business. 

Which ones resonate most with your organisation and your ambitions?

  1. Improving employees’ financial health 
  2. Increasing employee pension contributions
  3. Increasing employees’ knowledge of company benefits and policies
  4. Increasing productivity
  5. Increasing employee satisfaction and retention 
  6. Generating National Insurance savings
  7. Strengthening your talent brand
  8. Making progress on gender and racial equity
  9. Supporting learning and development
  10. Reducing corporate risk and liability 

1. Measurably improve employees’ financial health

Our service allows you to measure the tangible, financial impact coaching is having on your employees in real time. We do this by gathering anonymised data as to what percentage of employees are:

  • Increasing their emergency savings (also known as, financial resilience)
  • More protected by insurance and wills (also known as, financial security)
  • Increasing the amount put into long-term savings
  • On track for a more secure retirement
  • Feeling better about managing their debt

All employees get guidance and a detailed plan from their coach, including a personal action tracker to stay on top of their goals. Depending on the demographics of your workforce, employees could be up to £9,000 better off in 12 months time.

2. Increase employee pension contributions

Most employees aren’t making full use of their workplace pension because they don’t understand how it works and just how much it can transform their financial future.

Webinars, seminars and email content just can’t convey the huge impact that adding a little more to your pension each month can have. Research has shown that 65% of the general population are visual learners – they need to see information in order to retain it.

The money planner that our coaches use to build personalised plans for employees visualises the impact of your pension over time. It’s powerful stuff. And it’s why so many employees increase pension contributions after working with a coach. 

3. Increase knowledge of your company benefits and policies

In our experience, most employees struggle to find and understand all the benefits their employer offers. As one professional services employer said to us, “Our teams are saying they don’t feel supported, but they’re also not using the benefits we’ve put in place to support them.”

Even employers that have a “one stop” platform for all their benefits struggle to get high engagement across the board.

Financial coaches can help. Financial coaches start by learning about each employee’s life goals, so they can put everything in the context of what’s most important to them – and appropriate for their needs. 

For example, many companies offer salary advance loans for employees who are really struggling with high interest debt and, when it’s appropriate, coaches can make sure the right employees know the support is there and how to use it.

The guidance coaches give is also designed to be holistic. 

For example, if an employee is planning to start a family, they’ll discuss everything that’s related to that goal: financial options like family tax credits, Junior ISAs, but also childcare costs, parental leave, life insurance, wills and more. 

“We talk to so many employees who can’t find (or understand) the parental leave policy,” Shah Abbasi, our Head of Coaching, tells us, “but they don’t want to ask because they’re not ready to have that conversation with their manager. Our coaches can point them in the right direction because we’re already talking about their longer term goals.”

4. Increase productivity

Countless studies have attempted to prove a correlation between financial health and productivity in the workplace. Some studies have even estimated a cost of 15% of average salary lost to financial wellbeing. 

These numbers are difficult to measure and track, but we hear anecdotes from coaches and employers all the time.

A HR leader at a regional retail business told us, “I know employees who ask to take one day of holiday a month to deal with their debt situation…I don’t doubt others take that time off sick or do it on company time.” 

In businesses where ad hoc absences have to be filled immediately, the costs can be enormous.

Another UK hospitality business told us they “spend £1,000,000 a year in agency fees to cover missing staff … we know that a lot is stress-related absence.”

By addressing the root causes of money stress on an individual basis, coaches help employees build confidence and resilience so they can manage debt, bounce back from shocks and start planning ahead.

5.  Increase employee satisfaction and retention

You’ve given out raises. You’ve benchmarked your salaries. Your people are the biggest investment your business makes. But your team still feels underpaid. Sound familiar?

There are lots of reasons why employees change jobs, but one of the biggest is pay. Many workplaces are investing in financial coaching to drive retention. 

“One of the most important principles of financial health is balancing income and expenses,” says Shah Abbasi, our Head of Coaching.“But when we feel financially stretched, it’s easy to focus more on our income than our expenses.” 

Coaches can transform this conversation and help us see what is possible with our current salary – moving your employees’ mindsets from “spending more” to “spending better.” They help employees get to the root of what makes them happiest – so they can be even more intentional with their money, spending on that, while gradually decreasing other expenses. 

This changes our relationship with money for the long-haul. “And it means when we do get the promotion or pay rise,” says Abbasi, “we feel the benefits of that for much longer.” 

One national accountancy firm did the math and told us, “We pay 20% of salary for recruitment. If we invested in financial coaching for 300 people and 8 stay, that fully covers the cost.” 

Another Head of HR said, “Even reducing our annual recruitment costs by 2% makes this investment worth it – and that’s before you factor in all the other savings.” 

6.  Generate National Insurance savings

When employees increase their pension contributions, the employer’s National Insurance costs are reduced. For employers that need to make a business case for financial coaching that shows an impact on the company’s bottom line, this is where to start.

One financial services employer we work with estimated that if 25% of the employees we coached increased their pension contributions by £300 a month, they could save £670,000 in National Insurance! 

It’s a win-win – employees get way more to put away for later in life and employers get a savings today.

7. Strengthen your talent brand

Many workplaces across the UK are looking for ways to transform their culture – creating an environment where people can bring their whole selves to work. They’re looking to create greater transparency, inclusivity, openness, reduce hierarchy and more. 

But putting this into practice is really tough.

Financial coaching helps you “walk the talk” by signalling to your employees that it’s OK to feel unsure about money. Financial coaches help role model this behaviour to help it gradually take root across your business. 

The leader of a regional financial services business told us “We want to transform our culture into the kind of forward-thinking environment that will attract the next generation of talent. We need to create a space where people feel comfortable talking about tough things and feel really supported.”

8. Make progress on gender and racial equity

We’ve all seen the studies on financial inclusion and the reports demonstrating the gender pay gap in sector after sector. And our own insights frequently show us gaps in financial confidence, debt, pension and protection between different groups. 

Financial coaching can give you access to insight about other financial gaps in your own workforce you may not be aware of – and to measure improvements that are being made in realtime. 

A financial services employer recently came to us saying, “We’re interested in financial coaching because we think it’s the most effective way to address gender inequality in our team.” 

The FT has also recently published research as part of their FLIC (Financial Literacy and Inclusion Campaign) that showed the biggest gaps in financial literacy were among those living in deprived areas, the young, women and ethnic minorities. 

There are individuals in all businesses who have been excluded from financial education for different reasons. They may be new to the UK and not know how the financial system works. They may not have been given access to finance in their education or learned about things like pensions or long-term investing. 

Technology alone can’t understand the cultural nuances and emotional relationship with money in the way another person can. At Octopus MoneyCoach, we have a diverse community of coaches who can connect and empathise with individuals on a personal level to make sure they get the guidance they need.

9. Support learning and development

In many businesses, financial literacy is an important part of the job. But because it’s rarely taught in schools, even the smartest, most accomplished professionals might lack an understanding of the basics when it comes to their own finances. 

Increasing an individual’s financial literacy has a knock-on positive effect for their families, friends and peers as well as their own financial health.

The Head of L&D at a UK housing association told us “Our team often has conversations with residents and homeowners about their finances…I see financial coaching as a way to help them feel more equipped for those conversations.” 

We see more and more employers looking to L&D budgets to fund financial coaching. Employees are more likely to feel supported if they know it’s not just them investing in their financial future, but their company cares as well. 

10. Reduce corporate risk and liability 

For some businesses, an individual’s personal finances can open the business to liability. If you work in an industry that’s exposed to corruption and bribery, financial distress is a real risk because it has a detrimental effect on our decision-making capability. 

Studies have shown that chronic stress biases human decision-making towards habits rather than goals, and also affects our ability to make reliable cost-benefit evaluations. 

A public sector employer recently told us, “We want to do whatever we can to make sure that our team is protecting themselves from getting into a bad situation.” And a financial services client told us that while they knew their staff were financially savvy professionals, they wanted to make sure they had the same expertise for their own personal finances. 

We know that money worries affect everyone, regardless of industry, salary or age so as you’re dedicating time to upskilling your teams to manage their professional risks, make sure you’re giving them the right tools and support to manage their personal risks. 

Our mission is to transform a million lives through financial coaching. We want employers to feel confident that they are offering their employees real, tangible benefits that can improve their financial health in meaningful ways. 

If you’re ready to consider financial coaching for you colleagues, get in touch with one of our experts today.

Octopus MoneyCoach has become an associate member of the Personal Finance Society (PFS), a professional body dedicated to building trust in the financial planning profession.

The membership certifies Octopus MoneyCoach as a trusted business that upholds the highest standards and ethics. The announcement gives the company a seal of approval, and will give consumers extra confidence when using a MoneyCoach financial coach.

Caspian Paget, head of coach excellence at MoneyCoach, comments: “We want to do everything we can to help lead the way in establishing shared standards for financial coaching in the UK.”

One of the most reputable bodies in the financial services world, the PFS is the longest-established of the Chartered Insurance Institute (CII) societies. More than 5,000 financial advisers in the UK have achieved chartered financial planner status from the PFS.

Members of the society must act in the best interests of clients and demonstrate integrity and fairness. Proper standards and policies – and a clear complaints procedure – are required to protect clients.

Members must comply with the spirit as well as the rules of regulation and employment law. They should operate a clear diversity and inclusion policy, for both staff and clients, as well as a policy of corporate social responsibility.

Last month, the PFS said that its focus for 2022 was to build a strong and sustainable profession, and ensure financial planners continue to empower people to have confidence in managing their finances.

New FTSE 50 Research into Financial Wellbeing

Discover the new solutions that are giving employees real financial peace of mind

Despite access to well-funded benefits packages, 95% of FTSE 50 employees still worry about money. What’s not working?

We surveyed 1,000+ FTSE 50 employees and found out:

  • What really drives money worries
  • Which financial benefits rank highest
  • 3 new proven solutions to employee money stress
This article is part of a series called Rethinking Rewards. We’re inviting experts to question the assumptions behind some of the most common workplace perks.

Nominating “pension champions,” bite-sized messaging, considering neuro-diversity in communications, starting from day 1 and using hot topics like climate change are some of the best ways to get employees engaged with their pensions.

This is according to a range of experts that Octopus MoneyCoach spoke to about how we can make saving for retirement more exciting and relevant to workers. 

While auto-enrolment has done a great job in getting workers into pension schemes, there is still a lack of understanding and engagement. Some employees don’t even know they can log into their pension plan, and change their investments or increase their contributions.

The days of talking to workers about their pensions as one homogenised group, either by sending them fat brochures that rarely got looked at, or via long-winded webinars, are over.

“Things have moved on considerably – both in the way we reach scheme members, and the way in which we talk about pensions,” notes Daniel Smith, head of UK workplace investing at Fidelity International. “Participation in digital sessions is now significantly higher than face-to-face. Digital sessions provide more flexibility for members to engage in a way that suits them.”

He says conversations with employees are broadening, moving away from “pensions” and focusing on the role of retirement as part of financial wellness. Bite-sized action-orientated messages that are relevant to different life stages are also key.

“Providing members with a large goal – that is perhaps 30+ years away – is daunting and can be counter-intuitive,” reflects Smith.

According to Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, the most engaged workforces tend to be those that have “pension champions.” She explains: “They might be someone in HR, benefits or on the employee council. These people can be very effective at helping nudge people into finding out more. I think sceptical employees are more likely to trust their colleagues than they are someone representing a finance company.”

Diversity and inclusion will become an increasingly important focus for workplace pensions. For example, how they can address the gender pension gap, but also considering any vulnerable employees, perhaps due to health issues.

Smith points out that neuro-diversity should be factored into engagement materials, such as adding subtitles to video content.

For Shah Abbasi, head of coaching at Octopus MoneyCoach, talking about pensions as soon as an employee joins a company is crucial. “Pensions should be included in the induction – when you join an employer, ‘here’s your email address, here’s access to our IT system, here’s your pension log-in details, and here’s what you’re contributing, and would you like to look at the impact of increasing it?’”

The earlier employers can get their staff interested with their retirement savings, the more powerful it is, and the better outcomes they’re going to have, says Heidi Allan, head of financial wellbeing at the consultant Lane Clark & Peacock. 

She adds that HR teams can use “hot topics” to boost engagement, such as climate and the environment. “These are beliefs and values that everyone cares about and we think about in our daily choices, such as recycling, what to eat, which car to drive.” Most workplace pensions offer a sustainable or ethical fund choice. 

Finally, the importance of keeping communications simple, and testing as you go, should not be forgotten. It may take several attempts to get staff engaged, so employers should persevere. Simpler log-ins, forecasting calculators and giving employees the opportunity to book 1-on-1 time with an expert can all help.

The importance of re-framing pension conversations

We asked Amanda Hall, head of customer engagement and financial wellbeing at Smart Pension how to get people feeling more inspired to think about their pension and take action sooner in their careers.

Get more inspiration like this straight to your inbox

Every week, we publish a new article in our Rethinking Rewards series, with inspiring perspectives on rewards like pensions, parental leave, bonuses and more. 

This article is part of a series called Rethinking Rewards. We’re inviting experts to question the assumptions behind some of the most common workplace perks.

Employees do not appreciate enhanced pension matching – despite it being an expensive and valuable perk – a recent study suggests.  

Octopus MoneyCoach asked employees who work for FTSE 50 firms how satisfied they were with their benefits package. Surprisingly, there was no difference between those who were offered enhanced matching and those who weren’t. In both scenarios, 78% said they were “somewhat satisfied” or “very satisfied”.

Employers often assume matching employee pension contributions increases talent recruitment, engagement and retention. And with auto-enrolment levels fairly low, offering an extra pension payment feels like a responsible gesture. The benefit has the power to boost a worker’s pension, and improve their lifestyle in retirement.

While the minimum total amount paid into an employee’s pension under auto-enrolment is 8%, some employers pay in far more. In some cases, the total employee / employer / tax relief combination exceeds 20%. Particularly generous companies offer double matching: the worker puts in 5%, and the employer pays 10%.

So why does it seem employees don’t value this benefit? Pension experts are quick to point out that this is one of the best perks you can get; effectively free cash from your boss, which gets more free cash on top (courtesy of tax relief).

They are also unanimous when they say matching must be accompanied by good communication.

“Matching can make a difference provided it is communicated well,” notes Michelle Cracknell, the former head of the Pensions Advisory Service. “Good communication will produce better outcomes. Good communication is listening to make the communication relevant to the member. Pensions schemes communicate often and most communications are so verbose that it turns people off.”

Matching normally involves two communication channels, from the HR team and the pension scheme. But the messages need to be clear, targeted and complementary to each other.

Shah Abbasi, head of coaching at Octopus MoneyCoach, suspects some workplaces don’t communicate pension matching very well. “As a coach, our top tip is if you can afford it, take advantage of that free money from your employer.”

According to Henry Tapper, founder of pensions firm AgeWage, matching can create a two-tier system. “Too often, incentive-type plans rely on intellectual expertise. The people who take up matching are smart. Those who don’t either don’t have the money to match, or are insufficiently financially engaged to work out that 1 + 1 = 2, of which there are an awful lot. Those people just never stop and think about it. And that’s the problem.”

Tapper says HR directors want to reward those people who are smart, because they’re good employees – “but that shouldn’t be at the expense of those people who are dumb”.

Again, this comes back to communication. Ensuring all staff hear the message, and understand it, is key. This may also play a part in a company meeting its diversity and inclusion targets. 

Maike Currie, investment director at Fidelity International, comments: “To help employees truly grasp the value of matching, the engagement programme is vital. Creating an understanding through regular emails, educational webinars, interactive tools and video content helps build employee awareness.”

Get more inspiration like this straight to your inbox

Every week, we publish a new article in our Rethinking Rewards series, with inspiring perspectives on rewards like pensions, parental leave, bonuses and more. 

Conor Munday is an Employee Experience lead for Goodlord, an award winning lettings platform (and certified Great Place to Work™) that manages the entire tenancy process from start to finish. We caught up with him to discuss what a thriving work culture looks like in 2021 and beyond, if we want the same things from work as we did 50 years ago and if office culture can truly exist, without an office? 

Less than five minutes into chatting with Conor, it’s immediately apparent how much both he, and the start-up he works for genuinely care about the people working for them. He says “there’s nothing more important than the people … they are the heartbeat of any company”, and this sentiment is something echoed throughout every decision the business makes. So why is creating a good culture so important? For Goodlord at least, while the job often gets employees to walk through the door, it’s the culture that gets them to stay. 

Culture is everyone’s business

Conor and the whole people team appreciates culture is not something business leads can just click their fingers and expect to happen – this is something that must be cultivated, prioritised, worked on. At Goodlord, this often takes the form of different “club” offerings – diversity club, wellbeing club, party club and book club. Employees are responsible for chairing the different societies, but the business takes an active role in driving them forward. Whether it’s International Women’s Day, Pride or Black History Month, every important calendar moment is marked and celebrated. 

Bringing your whole self to work

It’s not just the culture clubs that make Goodlord a fulfilling place to work. Conor says that the work environment is a key contributing factor too. One of the company’s core values is “to bring your whole self to work.” So what does that actually mean in practice? It means feeling comfortable to be your authentic self and bringing the things you care about into work. At Goodlord, everyone is genuinely interested in each other. Celebrating each other’s differences ultimately makes the office a fun place to be and a fun place to work. “Fewer and fewer people want to compartmentalise themselves anymore, especially when so much of your life is spent at work.”

“Whole person” benefits

Goodlord don’t mess around when it comes to benefits, either. They recognise that thriving cultures require thriving people. Their package offers financial, physical and emotional support, whether it’s through unlimited holiday days, Sanctus mental health coaching or Octopus MoneyCoach for financial guidance. Times are changing now more than ever though, and so called “traditional benefits” alone aren’t enough.  There’s so much more that goes into happy and healthy work life. People are moving away from the corporate structure and no longer want to sit in a tiny cubicle with their heads down until lunch. Today, employees expect to work with people they genuinely like and want to spend time with and grab a beer from the kitchen fridge on a Friday afternoon. “There’s almost a housemate vibe here – a rare combination of extremely disciplined but also so supportive.”

Culture after Covid

So how do you keep such a strong work culture alive when a global pandemic hits? Like most companies, the pandemic was an initial struggle for Goodlord, whose culture was previously so connected to the office. It’s been a busy year for the start-up, with their workforce almost doubling in size whilst everyone was working from home. 

Although initially challenging, the company managed to provide their unique culture in different ways – virtual coffee meetings, digital onboarding weeks and personalised Slack channels for every new joinee. Now, all meetings are “remote first” – so unless everyone present is in the office, the meeting is facilitated via Google Hangouts. This ensures that people who aren’t travelling in feel fully included in the team and culture.

With so much of the future of working life still up in the air, it’s clear from talking with Goodlord that one thing will never change in the pursuit of running a successful business. Taking care of your employees and investing to ensure they’re thriving individually and as well as collectively, is the foundation for any brilliant culture. 

Goodlord has partnered with Octopus MoneyCoach to offer financial coaching to every one of its employees since 2020. 

Is pension tax relief still broken – despite the Budget announcement?

This article is part of a series called Rethinking Rewards. We’re inviting experts to question the assumptions behind some of the most common workplace perks.

Lower-paid employees are still at a disadvantage when it comes to workplace pensions, despite the government’s efforts to fix a long-standing tax relief quirk.

In last month’s Autumn Budget, the Treasury announced that more than a million workers will be able to claim a pension top-up worth an average of £53 a year. The top-up is equivalent to the tax relief missing from their pensions, and will be introduced in April 2024.

The lost tax relief affects low earners that contribute to a workplace scheme that operates on a “net pay” basis.

Workers that pay into a net pay pension but earn less than the personal allowance (£12,570 for 2021-22) do not receive tax relief, while those who contribute to a relief at source scheme do. The net pay anomaly particularly harms mothers who work part-time.

However, the top-up has been sharply criticised by pension experts, who say the solution does not go far enough.

Ros Altmann, the former pensions minister, comments: “I had hoped for a much more rapid solution to this injustice. It seems the lowest earners will continue to suffer for the next few years. If their employer used a different type of pension scheme, they would have extra money, which is going to be particularly important as inflation takes off.”

Under the government system, employees will need to apply for the top-up themselves – but Altmann says this is the wrong approach. “Pension providers or employers should be required to organise a group claim process.”

Henry Tapper, founder of pensions firm AgeWage, agrees the system needs to come in more quickly, and suggests back-dating claims. “Many of these people will have been overpaying their pension contributions [due to reduced tax relief] since 2015. There is no promise of compensation for the money lost because of this payroll lottery.”

The government estimates only £1 in every £6 will be claimed, based on past experience and the fact those claiming may be inexperienced in dealing with their own tax affairs. “It would be better if money was paid back from where it came – payroll,” notes Tapper. He adds: “Is it right that a solution is being offered which offers so little to so few?”

Beyond the net pay scandal, experts are warning of other problems with tax relief. Workplace pensions tend to be optimised for the highest earners. They receive more tax relief, and are often more aware of how the free cash from government can turbo-charge their pension, so will make extra contributions. How does unequal tax relief – and varying levels of awareness – align with a company’s diversity and inclusion strategy?

Tom McPhail, director of public affairs at pensions consultancy the lang cat, says tax relief should be simpler and more evenly distributed. “I’d like to move away from it being tax relief, and instead have a system of employer contributions and government top-ups,” he comments, which would incentivise and reward people for saving and being prudent.

Shah Abbasi, head of coaching at Octopus MoneyCoach, thinks the problem with tax relief is the jargon around it, and a lack of education. “The rules make it so hard for people to understand and many just switch off. The imbalance between the people who know about tax relief and take advantage of it and those who don’t is unfair.”

Get more inspiration like this straight to your inbox

Every week, we publish a new article in our Rethinking Rewards series, with inspiring perspectives on rewards like pensions, parental leave, bonuses and more.