Employers need to do more to support staff as debt levels, interest rates and living costs rise.
Research commission by Gallagher shows the UK spiralling towards a national debt crisis, with over a quarter of UK adults (26 per cent) can’t afford debt repayments some months, or at all. It says these figures show there is an an urgent need for firms to prioritise financial wellbeing within their benefit propositions.
The under 35 age group are particularly hard hit, with 39 per cent being unable to meet debt repayments some months. London also has a growing debt problem with 30 per cent of those living in the region struggling with regular repayments.
The Gallagher research found that two-thirds (67 per cent) of UK adults admitted to being concerned about their finances – with 8 per cent having to use loans, overdrafts or credit cards to make ends meet, and 19 per cent depleting their savings to do so.
This situation is likely to worsen with energy bills rising sharply this Autumn. The research found almost one in four respondents (23 per cent) were concerned hat they would not be able to switch their heating on this winter or pay their energy bills. Gallagher says this could mean that thousands more will end up even further in the red, but this time with their energy provider.
The research also found if UK adults were to receive an unexpected bill of £500, the most common way to pay for it would be to dip into their savings (31 per cent), followed by a similar proportion who would use available funds in their bank account (30 per cent). Whilst others would need to go into debt and put it onto a credit card, or use their overdraft (12 per cent), borrow the money from family or friends (9 per cent) or have no means at all to be able to pay the bill (8 per cent).
Gallagher director, people experience, Alistair Dornan says: “We only have to turn on the news to be hit with the stark realisation of the cost-of-living crisis hitting those living in the UK at the moment. But, as our survey shows, there is another crisis looming – a national debt crisis.
“The reality of ‘keeping going’ day-to-day is common nationally and is requiring many to make some hard decisions. For some this involves increasing their debt levels simply to make ends meet.
“Almost a quarter (23 per cent) of UK adults are already worried they won’t be able to switch their heating on this winter or pay their energy bills” This he says is before the increase due in October. “Add to this the fact that interest rates rising is increasing the cost of borrowing, the UK is facing a real winter of despair.
“As these issues add to people’s stress and anxiety, it’s more important than ever that companies provide employees with the right support and advice to help them manage their financial health needs.”
He adds: “Although many organisations already provide a range of money saving benefits for their people, there are other ways they can help to alleviate the stress and worry facing employees who are concerned about debt and their personal finances.
“Financial wellbeing is ultimately about employees feeling that they have confidence, control and capacity in their finances. Firms providing money saving benefits and practical tools to support their people – while communicating them effectively – will help employee while communicating them effectively – will help employees through the cost-of-living crisis and those struggling with debt.”
Gallagher says that while many employers will not be able to afford inflation-beating pay rises, it suggests other means by which companies can support staff with financial wellbeing. These include:
- Signpost employees to free debt support and advice. The best solution for debt support is to have an Employee Assistant Plan in place, but in the absence of one, there are a number of credible, free-to-use debt support services available, such as StepChange (www.stepchange.org), The National Debt Helpline www.gov.uk/national-debtline or CAP https://capuk.org/.
- Boost employee benefits communications. Employees can often save hundreds by making the most of the money saving benefits on offer to them. But many are often not aware of what is available or how to access these schemes. Initiatives such as delivering financial education drop-ins, money saving webinars and regular communications around ‘how to save money’ rather than ‘employees benefits’, can help firms deliver their messages in a more relevant way.
- Offer new money saving benefits. Organisations should review the use of existing benefits to ensure that they are effective and replace them with more relevant solutions if not. There are some great new money savings benefits available that are convenient to use, such as the bYond card, a reloadable debit card that can be used in a range of retailers giving up to 15 per cent cashback on spending. This will provide significant help to those struggling with debt and financial problems.
- Review expenses policy. Companies should review their policies and communications around expenses and tax efficiency – to ensure that the range of allowances are in line with the current cost of living and employees are aware and making the most of what is available to them. For example, mileage allowances may need updating to reflect the current fuel costs, and home support allowances could be considered to assist employees with the costs of working from home – which could be critical during the winter months when homes need heating during the day.
- Stress management. Financial stress can have a massive impact on mental and physical health. If employees are feeling stressed out and anxious, undoubtedly this is going to impact productivity. Help employees to make keeping active a top priority – encourage them to go for a walk at lunchtime, promote free meditation apps designed to help combat stress and consider offering discounted memberships to fitness facilities
The post Employers need to prioritise financial wellbeing as debt crisis spirals appeared first on Corporate Adviser.
