6 actions to support employees through the cost-of-living crisis
The financial resilience of employees is being pushed to breaking point by rising costs, with inflation hitting 10.5% in December.
The BBC recently reported that a quarter of UK adults have less than £100 in savings, leaving them vulnerable to rising bills and unexpected costs. Even employees on higher incomes are experiencing a drop in discretionary spending, and a knock-on impact on their standard of living.
In 2022 Benefex published a cost-of-living crisis special report to highlight how employers are uniquely placed to support employees through their benefits package. It was our most downloaded report of the year, as supporting employees through this crisis is clearly at the top of the agenda for employers.
Last month, we hosted a roundtable discussion in London where we were joined by 14 senior global reward and benefits leaders from companies such as AND Digital, Zoopla and Arqiva, as well as panellists Ridhima Durham, chief commercial officer at Salary Finance, and Daniel Crook, protection sales director at Canada Life.
The theme of the discussion was: From crisis to comfort: Supporting employee financial wellbeing through the cost-of-living crisis. We discussed the actions companies are taking to help give employees more confidence and control when it comes to finances – from better leveraging the benefits toolkit, to the importance of clear communications, protecting against risk and more. These are the top takeaways from our group discussion.
6 practical actions to support employee financial wellbeing through benefits
1. Communicate how your benefits toolkit can help
Many employers already have tools that can help employees mitigate rising costs – like discount sites and salary finance. However, our roundtable attendees agreed that putting the right communications strategy in place is key to promote the benefits already in place and educate employees on how they can best use them.
One benefits leader highlighted that they needed to tailor communications based on employee life stage – new graduate employees were concerned about paying rental deposits and rising transport costs whereas director level employees were looking at how to navigate rising mortgage costs. Tailoring their communications to each group and highlighting the most relevant benefits helped them to drive engagement.
2. Start a conversation about financial wellbeing
When it comes to supporting employee financial wellbeing, having open conversations helps employees get the resources and support they need to build financial confidence.
However, not all attendees agreed on whose responsibility it is to communicate benefits, cascade information and support employees – one group had seen success with wellbeing champions whilst another felt mental health first-aiders played a more important role in supporting overall employee wellbeing (not just financial). All attendees agreed that the right training structure to these committees is essential and managers can make a big difference as they’re more aware of each employee’s individual situation.
3. Provide access to affordable credit
In the face of rising interest rates, finding more affordable ways for your people to service debts gives them more control over their finances and supports employees closer to the ‘crisis’ end of the financial scale.
By porting high-cost debt into one single loan offered at competitive interest rates through Salary Finance, employees can start to move from debt into savings. The repayments come out of payroll before the employee sees it, making repayments automatic. There’s also no risk to the employer as the agreement is with the employee and Salary Finance; if they leave the organisation then they take the loan with them.
Our roundtable discussion was joined by Ridhima Durham form Salary Finance who highlighted that they typically see a 10% increase in employee credit scores within the first year because the employee has consolidated multiple debts through Salary Finance. This can help them get a mortgage and 80% of employees who had used payday loans previously don’t use them again.
4. One-off payments and allowances
There was a lot of discussion about the pros and cons of providing a one-off cost-of-living payment to help with rising costs during winter – which several of the organisations in attendance had provided. A common concern was whether this was a one-off or whether they should budget for another payment next year because employees may expect it. One organisation that did a spot payment will be focusing more on salary increases in 2023, rather than another one-off payment.
Another attendee highlighted that they’d made a payment to help employees through this period (based on two tiers - £30k and £50k), and it had been very well received by employees. As a non-for-profit organisation, they can’t always pay market salaries, but they do a lot around employee support and focus on how these are communicated with employees.
The consensus on whether organisations should provide this was dependent on industry and some attendees flagged that these kinds of payments can have unintended consequences in terms of tax and universal credit. For global organisations, the approach needs to be tailored to different regions due to varying tax rules.
Wellbeing allowances, emergency loan funds and rental loans were also discussed as ways to provide extra support to employees who need it most – for example, employees in London who are having to pay three months’ rent up-front or who have an unexpected cost like a boiler or car breakdown and don’t have enough savings to cover it.
5. Protect against key risks
Offering flexible protection benefits gives employers a unique opportunity to support employees and their families by insuring against key risks. As well as paying out for the long term, income protection can offer more immediate support services to employees and prevent them needing to submit a claim in the first place. Some of the services they offer include counselling, virtual GPs, physiotherapy and more.
Daniel Crook of Canada Life said the help of their early intervention team meant nine out of ten absentees returned to work rather than made a claim. Numerous stories reveal how income protection could be one of the most important insurance products employees will ever own.
6. Support employees in planning for the future
One theme that cropped up throughout the discussion was how to contextualise benefits in a way that makes them easier to understand, feel more tangible and make it easy for employees to take action. For example, talking about pensions as ‘saving for the life you want’ or asking, ‘what kind of lifestyle do you want in the future?’ can get employees to think more about their financial future.
Retirement Living Standards explains this in terms that can help employees visualise the kind of future they want to save for. By increasing their contributions and making tax and NI savings via salary sacrifice, employees can set themselves up for a retirement where they can maintain their standard of living.
If you’d like to learn more about how your benefits toolkit can support your employees amid rising costs and improve their financial wellbeing, take a look at our cost-of-living crisis special report.
In partnership with Benefex
The home of award-winning employee benefits, reward, recognition, & communications.
