Money worries | Financial wellbeing: is your company disconnected?

Financial wellbeing: is your company disconnected?
Promoted by Financial wellbeing: is your company disconnected?

By Tracey Ward, Head of Business Development and Marketing, Generali UK Employee Benefits

Money may not be able to buy you love, but worrying about it can certainly cause you problems at work. In fact, money worries affect the workplace performance of 77% of the UK workforce, or about 25 million people, according to Close Brothers’ UK Financial Wellbeing Index 2019.

Financial concerns also keep people off work, with Office for National Statistics (ONS) figures indicating they accounted for about a third of the 15.8 million days people took off work due to stress-related illness in 2016.

That’s around 5 million working days missed in just one year.

But while most companies recognise the impact financial concerns can have on employee productivity, the majority of companies continue to prioritise physical and mental health over financial wellbeing.

And this is reflected in the benefits they offer.

Less than 50% of employers provide financial advice, and just 16% of organisations offer non-retirement savings plans, according to a recent report from employee benefits consultancy Gallagher.

Reasons for this disconnect include that financial wellbeing solutions are a relatively new element of employee benefits provision.

Jeanette Makings, Head of Financial Education at financial benefits provider Close Brothers, said: “Physical wellbeing has been around and recognised as essential to workplace health for a long time.

“But many organisations have only woken up to their role in promoting employee financial health relatively recently.”

People’s unwillingness to talk about financial problems is also a factor.

“Employees are more likely to open up to you about a broken arm or physical issue than tell you if they are struggling with their finances,” said Heidi Allan, Head of Employee Wellbeing at fellow benefits provider Neyber.

“But statistics show that two of the three biggest issues for stressed employees are money related.”

Whatever the reason, there is little doubt that modern companies looking to improve their workforces’ overall wellbeing should be tackling their employees’ financial problems as well as any physical and mental health issues.

“There is no doubt that physical wellbeing has very tangible benefits for employee mental – and of course physical – health,” said Peter Briffet who co-founded salary management specialist Wagestream to help struggling workers avoid expensive payday loans.

“But physical work perks won’t make a difference to someone plagued by debt because they have unhealthy spending habits and rely on high interest credit.”

Pension provision and advice

Under the government’s auto-enrolment scheme, all employees who earn at least £10,000 a year and are aged between 22 and the state pension age must now be offered a workplace pension to which their employer contributes.

Giving workers access to a pension is not the only way employers can help people prepare for retirement, though. Advice on how to save is also crucial.

In its Financial Wellbeing in the Workplace: A Way Forward report, published in 2017, the Financial Conduct Authority (FCA) found that 57% of employees would like access to financial advice.

And the good news for employers is that the government has increased the tax-exempt limit on advice for employees from £150 to £500.

What’s more, this exemption can be used alongside the Pension Advice Allowance, which effectively enables your employees to access up to £1,000 of tax advantaged financial advice in a tax year.

There are also a number of options open to employers who want to offer access to retirement saving advice. These include paying an adviser or employee benefits consultant directly, and reimbursing employees for advice they have sought elsewhere, potentially via a salary sacrifice arrangement.

Beating money worries

Today, more than 25 million Britons – or about half the population – exhibit signs of financial vulnerability, according to the FCA.

But people on low incomes are not the only ones affected by financial stress.

According to Close Brothers’ research, money worries also affect nine in 10 of those earning more than £50,000. And Neyber’s DNA of Financial Wellbeing 2018 survey indicates that 63% of UK employees have been affected by financial worries in the last year.

A lack of proper financial education in schools is one part of the problem.

“Simple things such as financial education and savings advice can be transformative to people, bearing in mind that many are never formally taught how to manage their finances,” Briffett said.

Given the reluctance many people feel to talk about money, setting up events to show them they are not alone can also make a huge difference.

“Financial health support doesn't need to be big expensive grand gestures,” Allan said.

“It can be as simple as sharing stories where people have formed good habits or have navigated their way out of a difficult situation.”

Helping employees to meet their financial goals

Helping your staff to attain their wider financial goals is another important part of keeping them happy and motivated.

Younger employees, for example, are likely to be more interested in getting a foot on the housing ladder than in saving for retirement.

That’s why a growing number of companies are starting to offer innovative benefits such as contributing to a house deposit scheme for younger employees.

Again, however, offering access to financial advice and education tools is a great place to start.

“Financial education can provide employees with the tools to improve their own financial wellbeing,” Makings said.

“It doesn’t need to be expensive – many providers have e-Learning platforms as a starting point, including case studies, videos and personalised email nudges to help engage people about their finances at key times throughout the year.”

Generali UK Employee benefits partners with Close Brothers, Neyber and Wagestream, along with a range of physical and emotional wellbeing specialists, as part of its Wellbeing Investment Matching and Early Intervention initiatives.

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