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14 Jul 2022
by Elizabeth Howlett

What are benefits providers doing to tackle the cost of living crisis?

As the cost of living crisis continues to erode people’s pay packet, REBA's associate content editor, Elizabeth Howlett, asks benefits providers what they are offering to help ease the strain.

What are benefits providers doing to tackle the cost of living crisis?


The economic situation in the UK has pushed organisations between a rock and a hard place. On one hand, employees are crying out for more pay to help offset their rising cost of living, but on the other, many firms are unable to raise wages to keep pace with inflation. 

Employers are currently “scrambling around” trying to ease the pressure with pay rises says Gethin Nadin, chief innovation officer at Benefex, while also being warned by the Bank of England and government against increasing pay. 

If there is a small positive to employers being caught in the middle between employee needs and state pressure, “it’s allowing benefits to emerge as a way to support people,” says Nadin. “If you can’t give pay rises, can you soften the blow in other ways? Review what you are already offering from a benefits point of view.” 

While employee benefits can act as a cushion to help combat spending and save money, what are benefits providers currently offering and is this enough to reduce the financial impact? 

What are employers doing to help? 

  • Offering pay increases where possible and reviewing existing pay increase agreements 
  • Considering workplace loans to provide an alternative to ‘buy now pay later’ debt 
  • Raising awareness of existing benefits through, for example ‘Money Monday’ sessions
  • Encouraging take-up of discount vouchers for supermarkets
  • Making sure that EAPs support financial worries 

Source: REBA Employee Wellbeing Congress 

Discounts to help with everyday expenses

Benefits providers are at the vanguard of the crisis, as Lisa Hack, head of benefit proposition at Personal Group explains. “We’ve had a lot of employers approach us to see what we can do in terms of the size of the discounts we can offer their employees on everyday goods through our platform,” says Hack. “It's not just asking for an increase on the discounts, it’s also exploring how to communicate those discounts.”

Hack says that Personal Group is exploring new approaches to explaining discounts on offer, “making it clear what is available and how it can help reduce spending. We are also aware that employers have budget constraints at the moment so we are working with them to find products that are free to use.” 

Alongside offering discounts on mainstream offerings such as leisure, gym and supermarkets, Personal Group is also introducing home-based insurance products and a new mortgage product to help employees access a range of discounts related to remortgaging or buying a new home. 

But the creativity isn’t stopping there, as Hack reveals that Personal Group is negotiating better deals and sacrificing some of its own profit. “We've contacted our key providers and the retailers and we are trying to get increased discounts where we can,” says Hack. “For some of our key products, where we would have made a slight profit we are instead giving a bigger discount to our employees, and we're all negotiating flash sales with those retailers.” She adds that they are currently in ongoing talks with several supermarkets to hopefully secure fuel-based discounts. 

Financial education isn’t a silver bullet, but it helps

“Many people are trying to find a direct solution to employees asking ‘my gas and electricity bill has gone up, how can you help’,” says Daniel Waller, director of compensation and benefits EMEA at Fiserv. He says that’s meant looking at creative ways to help employees, without major increases in benefits spend. “It's incredibly hard for people in the current macroeconomic environment, but companies can shift their investment in some benefits to try and help offset the cost to employees.” 

Waller has implemented a range of benefits over the years, such as a workplace ISA, EAP, financial education and an electric vehicle salary sacrifice scheme, that will have a direct impact on Fiserv’s employees today. However, he urges that there is no silver bullet to combat the cost of living crisis.

“Our approach is to help people manage their money and help make their pay go further,” says Waller. “This hopefully puts them in a better position not only from a planning perspective, but a wellbeing perspective too. They can make good choices and plan through some of the turbulence that they're feeling at the moment.” 

Clare Stinton, financial wellbeing analyst at Hargreaves Lansdown agrees that helping employees manage their money is a key priority for reward professionals. “Financial wellbeing is still at the top of employers' agendas. Since the pandemic we have hosted a series of regular webinars on a variety of different topics to help employees stay on top of their finances, boost financial resilience and employee engagement.” 

Stinton points out that the main area for organisations to focus on is holistic financial resilience, to get people thinking about any emergency funds they have and also highlighting the company’s financial benefits - such as pensions, investments and any other financial aid. “Have a focused session that tells you what your benefits are but also allows people to identify the vulnerabilities or gaps they have to achieve financial resilience,” she advises.

Both employers and providers are acutely aware that the cost of living crisis is putting pressure on employees’ day-to-day financial wellbeing – but inflation-busting pay increases are not always an option. Employee benefits can help businesses take a two-pronged approach by offering discounts that reduce everyday living costs, and by helping employees to develop stronger financial resilience. 

Reward and benefits’ time in the spotlight

“This is a reward and benefits professional’s time to shine,” says Nadin. “I think that reward function has become more important and benefits have become more strategically important to organisational success as a result of the cost of living crisis. We're seeing this re-evaluation of what the employee value proposition is,” he says. 

Nadin explains that there needs to be an acknowledgement that people are worse off now, as most employees are essentially experiencing a 4% pay cut because of the economic situation, and that the average pay rise this year is only going to be between 3.5-4%. 
“And that’s if you’re lucky,” he says. “That still puts people 7-8% worse off and I think we’re not at the end of this, interest rates will probably tip over to 10%, and most economists are saying there’s a 50/50 chance of a recession. 

“We aren’t just talking about money, when you see wage drops of that magnitude, you start to see an impact on living standards. It’s almost like another lockdown for a lot of people because the lower income households are being forced to make big decisions over where they spend their money, how many times a day they eat and whether they can heat their house.” 

Nadin points out that giving a pay rise is great, but that even in the most generous of scenarios, giving people 10% pay rises will just level off some of the damage. 

“Employers are considering the advice from people like the government of the Bank of England, which is to not give pay rises and it's obviously part of the reason why we are seeing strikes going ahead. We have to look at other ways of helping as well.

“Benefits schemes are a way of investing in the financial wellbeing of your people without having to give rises at this point, but anything that employers can do to make net pay go further they should be doing. 

“Even the smallest impact can benefit lower paid employees.”