At times like these – when many households are surviving on a reduced income due to a reduction in salary or redundancy -– the need to protect employee financial wellbeing has never been more important.
Jonathan Watts-Lay, Director, WEALTH at work comments; “Learning how to manage on a reduced income is crucial during these times, especially for those who are facing a fall in their overall household income due to either themselves or a partner having reduced work or through redundancy.
Financial education for all employees is especially important right now as it can help the workforce explore ways in which their daily finances can be supported. For those who are facing redundancy or have taken a pay-cut, it is crucial that they work out what their new income will actually be and budget accordingly.”
Watts-Lay adds; “There are several things that employees can do if they are facing a shortfall in income. This includes speaking to their mortgage lender or landlord to find out what their options are. There are some government schemes available and it may be possible to take a mortgage holiday. When it comes to overdrafts, credit cards and other debt, lenders are required to provide support to those who need it and it may be possible to defer payments or receive an interest free overdraft. Employees can also make significant savings by utilising discount vouchers and employers should make sure that staff are aware of any discount schemes available through the workplace. A lot of money can also be saved by shopping around for cheaper utilities and broadband providers.
Whilst it may be tempting for employees to try to save money by reducing or pausing their pension contributions, they should plan carefully before doing this. This is because if they can afford to continue making regular investments during a market downturn, more positive long-term returns may be generated.”
Watts-Lay comments; “It’s also really important that affected employees understand how to make the most of their redundancy package, particularly those approaching retirement. For example, by using some of their redundancy pay to directly boost their pension savings, individuals can reduce the overall tax impact on redundancy payments above the £30,000 tax free limit.
Employees who are facing retirement are probably feeling concerned if they can afford to do so at the moment. However, financial education could help them realise that they could use the tax free cash from their pension to pay off any outstanding loans and mortgages, and without these debts they may not need as much as they think to afford retirement.”
Watts-Lay explains; “And while social distancing rules mean that many employers have had to restrict attendance at face-to-face seminars, digital solutions such as interactive online seminars and webcasts are a highly effective alternative. For those who need help at retirement, virtual one-on-one guidance sessions can be delivered via a video call or telephone. This approach is particularly useful as it offers employees the support needed to help them clarify their financial situation and gain a deeper level of knowledge around their retirement income options.
It is vital that employers take steps to help their employees take control of their finances during this uncertain period and beyond. How companies manage it will have a huge impact on their future reputation and the retention and motivation of employees. Specialist providers are able to help employers develop and implement a bespoke financial wellbeing strategy specifically designed to make employees feel financially secure and able to navigate the future of their finances.”
Notes to editors:
WEALTH at work is a specialist provider of financial education and guidance in the workplace supported by regulated financial advice for individuals. This service helps employees make informed decisions to improve their financial wellbeing throughout their career and to maximise income at-retirement. As there is a growing need to provide support for pension scheme members at-retirement, our services are also available for Trustees to help their members fully understand their retirement income options and how to mitigate associated risks. For more information, visit www.wealthatwork.co.uk