More than 1.5 million people in the UK are experiencing debt and mental health problems, according to the Money and Mental Health Policy Institute. And many more are likely to be suffering in silence.

The problem of poor financial wellbeing extends well beyond those of us who are struggling to make ends meet and repay debts. An astonishing 24 million UK adults lack confidence in managing their money, according to the Money and Pensions Service, and only a third receive help.

The UK’s mental health epidemic is no secret. But we’ve recently started to hear more about the relationship between mental illness and financial wellbeing (or the lack of it).

How does financial anxiety affect the workplace?

During 2023, the average employee took 7.8 days sick, up from 5.8 days in 2019, figures from the Health Foundation reveal.

Of course, not all sickness absence is attributable to financial problems. However, we do know that people who start to suffer from depression are 4.2 times more likely to continue to be depressed 18 months later if they have problem debt.

Several group protection insurers have observed separately that from 2023 onwards, people have really struggled to cope with the cost of living and economic uncertainty.

How do they know this? They’re able to quantify the high demand for mental health consultations via the apps and employee assistance programmes that come as part of employers’ group protection policies.

Wider research highlights that employee concerns include:

● Worries about managing debt

● Concerns about inadequate pensions savings

● Ability to provide financially for loved ones if they get sick or worse, they die

● Lurching from payday to payday

● Struggling to make ends meet.

How can employers improve the financial wellbeing of their workforce?

Employers have a duty of care to prioritise the wellbeing of their employees by implementing supportive measures that address both financial and mental health concerns.

Here are some steps employers can take:

Financial education: Providing financial wellbeing services such as workshops and one-to-one sessions with money experts can empower employees to make informed decisions about budgeting, saving, investing and managing debt.

Group protection: Offering group protection policies – such as life assurance, income protection or critical illness benefits – can give employees invaluable peace of mind. As well as providing vital financial support at times of crisis, group protection policies include complimentary benefits that help employees take control of their own wellbeing.

Pension scheme improvements: Making defined contribution schemes work harder can make a real difference. Salary exchange, for example, delivers National Insurance savings for both employer and employees. You can make a great start by requesting a free defined contribution pension scheme health check.

Employee assistance programmes (EAPs): Implementing EAPs opens up confidential counselling and support services for employees facing personal or professional challenges, including financial difficulties.

Flexible work arrangements: Introducing flexible work arrangements, such as remote work options or flexible hours, can alleviate financial burdens associated with transport costs and caring for children and other dependants. It can also improve work-life balance and reduce stress levels.

Open communication: Encouraging open dialogue about financial challenges and mental health issues is a simple step that can improve wellbeing. Line managers are ideally positioned to promote and signpost wellbeing support available to employees. Training line managers to provide wellbeing support can be a great investment.

What does good financial wellbeing look like?

Where employees have reached out and accessed valuable mental health support, ‘return to work’ success rates as high as 96% have been reported.

Employees who feel in control of their finances have peace of mind, improved self-esteem, and a sense of optimism about the future.

With improved financial security, adequate savings, financial protection and manageable debt levels, individuals are freed up from stress and anxiety and can focus on other aspects of their lives, including their work.

By fostering a culture of support, understanding and empowerment, businesses can create environments where employees thrive both personally and professionally.