6 ways benefits can help workers though the financial crisis

Supporting the financial wellbeing of employees is a vital consideration for companies if they are to be truly regarded as employers of choice

Many employees will have never before experienced a financial environment as challenging as the one they are currently living through, with record levels of inflation, rising energy prices and increased interest rates.

Financial worries are proven to trigger depression, affect sleep patterns and damage relationships – and this, in turn, can have a negative workplace impact, reducing engagement, productivity and retention and increasing absenteeism.

Supporting the financial wellbeing of employees is therefore a vital consideration for senior management and HR teams if they are to be truly regarded as employers of choice.

Only 33% of organisations, however, believe they’re providing effective help, according to Willis Towers Watson’s (WTW) Emerging Trends in Healthcare Delivery Survey. And WTW’s Global Benefits Attitudes Survey (GBAS) revealed that 52% of employees lacked high levels of wellbeing in relation to financial security.

In response to the crises, almost two-thirds (62%) of organisations are reviewing their benefits programmes.

Here are six key elements of an effective financial wellbeing programme that offers an accessible, structured support system.

1. Financial education

Employers can help empower employees to manage their money more responsibly with financial education provision. This helps enable staff to be proactive, not reactive, and better able to prevent financial difficulties from occurring or escalating.

Delivered via a range of channels, including workshops, seminars, one-to-one coaching sessions, videos and advisory literature, financial education can be a powerful tool. It is at its most effective when the focus is on interactivity and inclusivity.

Employees can be taught about credit card consolidation, credit card interest rates and the risks and considerations surrounding ‘buy now pay later’ deals. Other essential learnings include the setting of financial goals, how to budget effectively, how to build a personal savings plan to meet unexpected costs and how to manage external financial pressures.

Financial health checks can also be offered as part of the wider programme.

Carefully planned, financial education can transform employees’ relationship with money, leading to greater confidence in their ability to cope in a crisis.

2. Availability of ISAs

According to Willis Towers Watson’s 2022 GBA survey, 42% of employees said the option to save directly from their salary was the most helpful way for them to manage their day-to-day finances.

Here, a direct debit facility or a payroll deduction into a corporate ISA can offer a valued solution.

A cash ISA will offer tax-free interest and where an ISA offers access to a share scheme employees are also exempt from tax on dividend income and from capital gains tax.

3. Optimised assistance

Financial difficulties can often result in anxiety and other mental health issues. Employee assistance programmes (EAPs) can be an effective in addressing such problems as they allow employees to choose the most appropriate counselling option from a range.

Furthermore, employers can use the EAP provider’s management information reporting to understand the volume of finance-related contacts their provider has supported and any specific areas that their financial wellbeing programme should focus on.

A further benefit of EAPs is that they can signpost employees to free advice and helplines that deal with topics such as debt, budgeting and saving.

4. Mortgage guidance

Navigating the mortgage market can be a source of financial stress for many – but making the right decisions in the current climate is paramount.

This can be alleviated by employers educating employees about the housing market and helping to steer them through what can be a bewildering array of mortgage options.

Some businesses have agreements with mortgage brokers who provide advice, source products and give administrative support to employers. This is done via one-on-one meetings, telephone calls or online.

Usually, the broker or mortgage lender takes responsibility for any advice given, which means there will be no legal implications for the employer if the advice results in problematic outcomes. In most cases, providing mortgage advice will have no cost for an employer.

5. Clear communication

The inherently sensitive and confidential nature of financial matters can make some employees reluctant to talk about these issues. Consequently, any successful financial wellbeing programme will need to be underpinned by a culture of open communication.

For employees who remain uncomfortable about sharing intimate financial details, employers can position themselves as a conduit, signposting plans, processes and resources which the employee can then access independently.

6. Responding to requirements

To fully meet its remit, a financial wellbeing programme needs to have clear objectives that address workforce needs and enable employers to gauge its success.

Moreover, it is not adequate to simply present a programme. Regular checks should be made to check whether employees are accessing it and fully understand how it can help them.

Feedback should be captured and analysed to inform the programme’s evolution. Ensure too, that employees are aware of additional benefits that offer financial support for their circumstances.

By formulating and implementing an effective financial wellbeing programme that addresses the present crisis, senior management and HR teams can help employees cope – and mitigate the impact if the situation deteriorates further.