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10 Mar 2021
by Jonathan Watts-Lay

Protecting the financial wellbeing of employees during the pandemic and beyond

The uncertainty brought by the pandemic has highlighted for many employees the importance of understanding how to manage on reduced pay. This is especially true for those who are facing a fall in their overall household income due to either themselves or a partner having less work or through redundancy.

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Financial education for all employees can help the workforce explore ways in which their daily finances can be supported. For those who are facing a drop in household income, it is crucial that they work out what their new level of take-home pay will be and budget accordingly.

Tips to help employees lower their outgoings

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.

Supporting those facing redundancy or considering retirement

For those who have sadly had to be made redundant, employers can support them by helping affected employees to 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 about whether they can afford to do so at the moment. However, financial education could help them understand how to 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 income as they think to afford retirement.

Although many employers have had to restrict attendance at face-to-face seminars due to the social distancing rules, 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.

Helping employees to take control of their finances

It is vital that employers help their employees take control of their finances during this uncertain period and beyond. How employees’ financial wellbeing is managed will have a huge impact on an organisation’s 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.

The author is Jonathan Watts-Lay, director at WEALTH at work.

This article is provided by WEALTH at work.

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WEALTH at work is a leading financial wellbeing and retirement specialist - helping those in the workplace to improve their financial future.

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