Employers worry about workers’ financial wellbeing, report shows
Cost of living worries are dominating the risks to workers’ financial wellbeing, research has found.
The Reward & Employee Benefits Association (REBA) in association with WEALTH at work has launched its new workplace Financial Wellbeing Research 2022, with responses from nearly 300 companies representing around 1 million employees.
Employers cite rising energy prices as the number one risk to the financial wellbeing of their staff (91%), with other cost of living concerns, such as rising consumer inflation (81%), rising rent costs (63%), wages not covering the cost of living (50%), and high household debt levels (49%) also factors.
In addition, after recent interest rate hikes, many will now also be concerned about mortgage costs as interest rates could be raised even higher.
We want to help more, say employers
Despite this, a majority of employers rate their ability to help employees build a financial safety net (63%) and manage debt (66%) as poor. Only 6% believe their organisation is good at supporting budgeting and money management – areas that are likely to become more prevalent because of the current cost of living crisis.
The deepening crisis has forced company boards to be more aware of the importance of financial wellbeing. This is highlighted in Aviva’s 2022 Working Lives report which finds that businesses are more concerned about the soaring cost of living (35%) than staying ahead of competitors (25%) and the fallout of Brexit (17%).
However, with only one in 20 employers having a mature financial wellbeing strategy in place, the focus on financial wellbeing is in its infancy and lags behind other wellbeing pillars such as physical and mental health, despite all three being closely linked.
Improving financial literacy is key
Workplaces also recognise that poor financial literacy is a key financial wellbeing risk (59%), with almost half (47%) believing that improving financial wellbeing for most workers is a challenge. On a positive note, 70% say increasing financial capability is a priority in the next two years.
Jonathan Watts-Lay, director at financial wellbeing and retirement specialist WEALTH at work, says: “As the cost of living crisis deepens, many employers will need to re-think their approach if they are to provide genuine support and solutions for improving employee wellbeing.
“Supporting employees with day-to-day needs should be the immediate focus, as well as providing support around long-term needs such as savings and pensions.”
He adds: “Key to this is offering financial education and guidance through coaching to help employees understand their finances, including ways to manage a budget, save money, manage debt, boost savings and prepare for retirement, as well as why it is so important not to opt-out of a workplace pension.”
Watts-Lay says workplace benefits should be carefully considered as they can be a good way to support employees. For example benefits could include offering discount schemes (on transport, meals or tech purchases), introducing salary sacrifice (covering cars, bikes, gym memberships or mobile phones), offering workplace savings and investment accounts (including workplace ISAs), as well as helping people understand the benefits of the company pension scheme and other benefits.
He adds; “For those struggling with their finances, there are many support services available to sign post employees to, including MoneyHelper’s budget planner. Charities such as StepChange and National Debtline can help people manage debt problems and Citizens Advice can help people to work out what benefits or grants they may be eligible for. Proactive employers are working to remove the stigma of debt and encourage employees to access the support available and not suffer in silence.
“To help with all of this, many leading employers are integrating holistic and proactive financial wellbeing programmes that really make a difference to support employees with building their financial resilience.”
Debi O'Donovan, director, Reward & Employee Benefits Association, says: “The UK’s cost of living crisis is causing greater focus on financial wellbeing in the workplace. While most employers are clear that responsibility for finances lies with individual employees and not the employer, healthy or poor financial wellbeing across a workforce can affect an organisation’s success and sustainability. Therefore, it’s time to rethink financial wellbeing.”
She adds: “Employee wellbeing got us through the Covid-19 pandemic, financial wellbeing strategies will get us through the cost of living crisis and beyond.”
The research figures are from The REBA/WEALTH at Work Employee Financial Wellbeing Survey 2022, which was carried out online between April and May 2022. Responses were received from 289 wellbeing, HR and employee benefits specialists, representing around 1 million employees, working at organisations of various sizes and across a broad range of industry sectors).
In partnership with WEALTH at work
WEALTH at work is a leading financial wellbeing and retirement specialist - helping those in the workplace to improve their financial future.
