Over the past decade, increasing numbers of working-age people across the UK have found it hard to make ends meet. Economic austerity, welfare state retrenchment and depressed wages along with increased domestic and accommodation costs have contributed to an erosion of savings, rising household debt, revolving credit card use and, as a last resort, the use of expensive forms of borrowing. Evidence suggests, moreover, that these financial difficulties are not cloistered matters; they cause stress and anxiety, which, in turn, can affect employees’ ability to concentrate, impair decision-making and job performance as well as impacting on levels of absenteeism and, ultimately, productivity.
Among the emerging work-based means of countering these problems has been a complex permutation of financial wellbeing services. Usually characterised in terms of behavioural objectives, these are benefits designed to help employees make more effective use of their pay and enhance their security through: better control of their day-to-day expenses; debt reduction and the utilisation of affordable credit; making financially-informed choices; improving their capacity and desire to save, and ability to withstand periods of financial pressure or loss of income.
Provided voluntarily by employers either as contractual entitlements, sometimes within flexible benefits systems, or as discretionary benefits, they can include: financial or pension education schemes (governmental; in-house or bought-in from specialist suppliers); personal financial management schemes (providing or facilitating access to a financial adviser, interactive budgeting tools, total reward statements, and income protection statements); debt counselling (signposting or referral to external sources of information and help, and employee assistance programmes); low-cost credit facilities (low or interest-free beneficial loans, payroll-deduction tie-ins with credit unions or FinTech organisations giving access to affordable debt refinance or loans); affinity or discount schemes (facilitating access to reduced-cost consumer goods and services and insurance products); non-pension savings schemes (seasonal or holiday savings clubs, broader employer-run workplace savings accounts, payroll-deduction tie-ins with credit unions giving access to savings accounts, share schemes, workplace individual savings accounts (Isas), and, potentially, Lifetime Isas); and group risk insurance schemes (life insurance, income protection, and critical illness).
The inclusion of these benefits in remuneration packages has largely been seen in a positive light. Recent government consultations, for instance, have stressed the importance, particularly the investment in financial education, while surveys of employers offering services and their employees have also indicated progressive outcomes in terms of morale, performance, recruitment and retention.
But financial wellbeing is not without issues. As non-mandatory benefits, what is offered is determined by organisations (and their advisory consultants) and this has led to major disparities in provision. There is a narrow footprint of large employers offering a range of benefits, with greater numbers of small and medium-sized enterprises (SMEs) supplying little or no assistance.
Even among providers, there are significant differences in investment both within and between the public, third and commercial sectors. Those establishments reluctant to participate in these schemes either maintain that they do not have the time, resources or expertise to offer financial benefits or question whether employers should be expected to support their employees in this way.
If, as seems the case, the government is looking to encourage the expansion of wellbeing on a more even playing field then it clearly needs to overcome the barriers to participation. This it might achieve by: increasing awareness and bringing the issues of indebtedness, financial capability and planning into mainstream policy debate; encouraging involvement through measures such as local budget pooling for benefits organisations cannot independently afford and, last but not least, reviewing the feasibility of targeted incentives, whether tax, national insurance relief or matched-funding of employer investment.
Margaret May and Edward Brunsdon are honorary research fellows at the Centre on Household Assets and Savings Management/School of Social Policy, University of Birmingham