It has long been recognised that financial wellbeing is a key contributor to the overall wellness of individuals. Financial stress impacts sleep, productivity, mental health and can ultimately result in absenteeism and employee turnover. In the current climate our awareness of financial wellbeing has become even more heightened. In the fourth article in our series looking at opportunities opening up as a result of the COVID-19 pandemic we look at what employers can do to support financial wellbeing in the workplace without incurring added financial pressures themselves.
What is financial wellbeing?
In short, financial wellbeing refers to an individual’s control over their day to day finances and a feeling that they have enough money to meet their needs. The 2019 Financial Wellbeing Index showed that 94 percent of UK employees worry about money, with 77 percent of workers believing that their financial worries impact them at work. Worrying statistics that can only support the fact that employers need to provide more access to financial education and tools to support their employees as part of their broader wellness programs.
What can employers do?
The Money and Mental Health Policy Institute recommend seven steps that employers can take to support their employees’ financial wellbeing. Here we look at those seven steps and discuss developments that we have seen in the market and how employers can support employees, often using tools already at their disposal:
1. Boost short term savings
Employers should consider partnering with financial services providers to offer payroll savings schemes, making it easier for employees to save.
There is an increasing prevalence of Financial Technology available on the market and providers using that FinTech offer access to savings vehicles. It is now easier than ever before for employers to provide access to workplace savings as part of the employee benefits package. ISAs, Lifetime ISAs and other investment options are now easy to make available to your employees often at no cost and very little administration to you as an employer.
2. Support access to affordable credit
Employers should offer short term loans and make larger credit facilities available to staff through payroll, allowing a lower rate of interest to be offered and helping employees to avoid fees and charges.
As well as offering workplace savings, we are aware of FCA approved companies offering affordable loans repayable via payroll as part of employee benefits packages. Similarly, Credit Unions, who traditionally were small, not for profit organisations, are professionalising. Some credit unions are offering payroll savings and loan schemes to allow employees to save and/ or make loan repayments via a payroll deduction made by their employer
3. Money Management
Employers should offer money management tools and support staff as a staff benefit.
Providing access to financial tools and education is now easier than ever before. Many pension providers, as part of their standard offering, make employee tools and portals available to employees to help with retirement savings. Some offer websites and apps which can pull in data from other bank accounts and credit card accounts and can also take into account property value, if applicable. These apps can also monitor spending habits and help with setting a budget and sticking to it. Understanding what tools are available to your employees from your existing providers and helping to raise awareness of them is a very simple and cost-free way of improving financial wellness amongst your workforce.
4. Tackle stigma
Understanding of problem debt and financial difficulty should be included in professional development for all Managers. Resources to help Managers support people with mental health problems and with financial concerns should be included in HR resources and HR teams educated about the causes and consequences of financial difficulties.
By publicising your awareness of the importance of financial wellbeing and the actions you are taking to support employees you can normalise the topic and help tackle stigma. Your employee benefit providers will often be happy to carry out site visits and share the additional tools and support that they make available to employees. You might be surprised by what your pension, Employee Assistance Program or Life Insurance provider will offer if you ask.
5. Access to advice and support
Employers could be a source of information for their staff, proactively distributing literature around financial wellbeing and discreetly signposting to advice services where appropriate.
Many employers already provide their employees with access to an Employee Assistance Program (EAP). However, all too often the support available from EAP is not well understood by employers and not communicated to employees. If you are already paying for EAP make sure you understand the benefits and share them with your employees. If you do not already provide EAP, or you are considering reviewing your EAP provider, it is worth checking whether EAP is available from any of your other employee benefit providers. Often income protection or long-term disability providers will offer EAP as a free add-on to your policy!
6. Reduce the cost of employment
To avoid making this problem worse, employers should pay for work-related expenses up front and ensure that financial hardship would not exclude a colleague from participation in social activities.
This particular step is clear and probably stating the obvious. However, a valuable reminder that we should not make assumptions about other peoples’ financial position. Putting undue pressure on employees to fund work-related expenses can cause unnecessary anxiety.
7. Ensure employees can afford to get better
When determining sick pay policies, employers should consider what impact these may have on staff willingness to take sickness absence, and the relative costs of presenteeism and longer-term absences. They should also proactively consider the benefits of group income protection policies in reducing the length of absences by minimising the financial stress of a period away from work.
Paid sick pay is important so that your employees suffering from any form of illness have the time and space to recover. Anxiety about a reduction in income can act as a disincentive for taking time off and can lead to longer absences in the long run. Your income protection or long-term disability provider can often be a great source of information for you to benchmark typical short- and long-term absence policies in your industry. Your income protection or long-term disability provider will likely be able to support you with a return to work plan and strategies to support your employee if you collaborate with them as soon as you become aware of an absence due to an employee’s financial wellbeing.
Providers can be worth their weight in gold
Often your employee benefit providers offer more than you realise and by engaging with them you may find out that you already have the bare bones to start to tailor your financial wellness strategy. If not, it may be worth you benchmarking what other providers offer as standard. Once you are aware of what you already have available you can make an assessment on whether you wish to provide any additional support to your employees as part of your financial wellbeing strategy.
Go Pensions have experience of several providers in the marketplace and we would be happy to discuss your current providers and how you might supplement them to develop your financial wellbeing strategy. Call us on 020 8213 5860.