Need to know:
- Employers are moving away from purely educational financial wellbeing to pro-active interventions such as workplace savings schemes.
- Home working is driving a shift in the way financial wellbeing advice is provided.
- Despite the pandemic, financial wellbeing remains the Cinderella of employee wellbeing.
The Covid-19 (Coronavirus) pandemic is shining a spotlight on financial wellbeing strategies like never before.
With 11.4 million jobs furloughed as at March 2021, widespread pay freezes and rising redundancies, the UK’s workforce is struggling with financial pressures that can take a heavy toll on employee wellbeing and ultimately on productivity. Employers that ignore these pressures do so at their peril.
Employer support
So how are firms bolstering their staff’s financial wellbeing during the pandemic? Wealth at Work director Jonathan Watts-Lay says employers are increasingly looking for solutions that actively help employees tackle their financial problems. “Financial education is no longer enough,” he explains. “Demand for helplines has gone through the roof, and employers are also much more open to referring staff to third parties.
“They’re also being very explicit about how to seek help and the next steps that an employee can take; be that debt consolidation, mortgage holidays or negotiating a rent reduction for a few months.”
Stephen Watson, Cushon’s head of proposition is witnessing a similar trend. He says: “Previously, financial wellbeing was about educating employees. Now employers want to offer practical solutions to help employees build up a financial buffer so we’re seeing a big rise in workplace savings schemes.”
Watson also notes that pension redirect schemes linked to workplace individual savings accounts (Isas), aimed at creating a more accessible savings pot, are also on the rise. “Covid is a great leveller. All employees, furloughed or not, are more nervous about job security and employers are recognising the need to build financial resilience,” he adds.
Demand for pensions advice has leapt since the pandemic, says Watts-Lay, as over-50s made redundant take their pensions, or decide to draw down on their pension pots to boost household income or delay retirement due to financial pressures.
“It’s about employers realising they need to offer a wider range of support for those different individuals in these times,” he explains.
Employers are also recognising that while staff may not have been furloughed, they may still be under pressure because their partner has been furloughed or made redundant.
“There is a growing recognition among employers that you can’t just look at the individual, that financial wellbeing is about household income,” Watts-Lay observes.
Access to help
The transition from office to home working is also changing the way employers present their financial wellbeing programmes. Jeanette Makings, head of financial education services at Close Brothers Asset Management, explains: “They are making them more applicable to this era.” There has been a rise in firms offering multimedia, multichannel financial wellbeing programmes, allowing employees easier access to information in the medium that suits them, she explains.
Take-up rates have grown, which Makings attributes not only to the financial stresses of the pandemic but also staff’s ability to freely access the service, in the comfort and privacy of their own homes.
Demand for a more granular understanding of employees’ financial pressures has also increased, Makings notes. “More employers want their financial wellbeing measured. They want to understand, what is our starting point? What is the financial wellbeing of our workforce? Where are the problem areas, both in terms of pockets of employees and particular issues?”
However, while demand for financial wellbeing is clearly on the rise, it still remains the Cinderella of employee benefits, even in a pandemic, says Charles Cotton, senior performance and rewards adviser at the Chartered Institute of Personnel and Development (CIPD).
He points to the CIPD’s recent Reward management survey, published in March 2021, which shows that 49% of firms polled have no financial wellbeing policy and only 12% plan to introduce one in response to the pandemic.
He comments: “For too long financial wellbeing programmes have been considered the poor relation to wellbeing, but we know the two are intrinsically linked and should have parity.”
He acknowledges the challenges businesses face right now, but adds: “There’s a strong case for employers to be doing more to support their people’s financial wellbeing.”
Watts-Lays agrees: “If [employers] cannot support staff in the middle of a pandemic, or when they’re coming back to work after being furloughed, if [they] can’t give them financial wellbeing support in some meaningful way, then when can [they]? If [they] can’t do it now then really, [they’re] just paying lip service to it.”