Financial wellbeing for life: how to support employees’ financial wellbeing in the short, medium and long-term
COVID has totally altered what is required of a modern employer. The majority of us are now working from home and this pattern (at least in some form) seems set to continue. As a result, mental health and wellbeing is now a top priority for ensuring employees feel valued, supported and ultimately continue to perform well regardless of their environment. ‘Financial wellbeing’ can sometimes fall out of this scope – more traditional mental health benefits packages are often prioritised for those with tight budgets, and understandably so. However, if employers truly understood the drastic impact financial wellbeing can have on both the short and long-term health and performance of employees, they may consider broadening their horizon somewhat.
Financial wellbeing, COVID and performance
LV recently conducted a research piece into how habits and general outlook had altered as a result of the pandemic. There are three statistics from their study that should ring in the ear of every UK employer. They found that 23% of UK employees expect their financial situation to worsen, 31% are worrying about money more than usual, and 44% believe they are more stressed and anxious as a result. Think about that: almost half of your company are likely significantly more stressed due to the financial impact and concerns brought about by COVID. When this is combined with a research piece by Close Brothers, undertaken prior to the pandemic, the impact has the potential to be huge for UK employers. They concluded that 77% of UK employees already worried about money when they were at work and 70% of them admitted to wasting a fifth of their time at work as a result. Addressing financial wellbeing over the short and longer term should be considered a vital consideration for the success of your business – it could reduce sickness and costs and improve productivity by upwards of 20%.
Educate to reduce financial stress and improve productivity
When considering support in the short and medium term for your employees, an ongoing financial education programme in the workplace is paramount. Helping educate and highlight action they can take to improve their long-term financial security will significantly improve performance and the level of value they place on you as an employer. At Lorica, we surveyed every employee we have worked with over the past 18 months, and 100% of respondents believe that providing financial education in the workplace is beneficial and should be important to their employer. It’s highly valued amongst the UK workforce and is now considered a key benefit by most.
Educational workshops and materials should also be focused on specific life events and stages. Financial stress is usually vastly different dependent on demographics so the educational content should be mindful of this. Younger employees should be supported with some more basic steps to help them deal with the continual battle of getting on the property ladder, whilst still needing to save for their future. Conversely, those in their forties and upwards need careful support in structuring for retirement. Pension provisions are extremely low in the UK with the average pension pot at a measly £5,800 a year. Failing to help prepare your employees for retirement has the potential to result in a demotivated workforce and create challenges when looking to exit employees and bring new talent through, as well as reduce the value associated with the pension benefits you provide.
Improve Pension provisions to increase financial confidence
Another straightforward way to improve your employees’ pension provisions and, in turn, their general wellbeing, is reviewing your existing pension provider. It’s important that your pension is not only engaging and easy to use but helps employees to understand and assess their current situation. Some of the best platforms collate information on the employee’s financial goals and provide a score out of 100, along with action points they can take to improve it. This helps employees focus on what actions they can take today to address what can feel like an overwhelming long-term issue. The platform also needs to be easy to use and have a full suite of online learning materials to bolster your education sessions. Using and accessing their pension should ultimately be an enjoyable process rather than a confusing and restrictive one. Knowing how much they have where, and how to improve their pension provisions, is a cornerstone of improving their financial security and reducing any financial anxiety that may rear its head.
Protection and support benefits for your employees
Some considerable thought should also be given to the long-term support your employees may need should they be significantly impacted by mental health issues. One in four of your workforce will suffer from a significant mental health condition every year. One in six will experience anxiety or depression in any given week. It’s one of the highest causes of absenteeism in the UK exacerbated by the fact that 70% of those with a diagnosable mental health issue still don’t receive treatment. As a result, it now tops the list of reasons why people claim on income protection policies in the UK, typically accounting for anywhere between 30% and 50% of all claims depending on provider. As such, it’s paramount that the income protection benefit you provide has mental health as it’s number one focus. Due to the nature of mental health, it’s important to assess the claim statistics of your provider in this regard and ensure that a wide variety of mental health conditions are included within the policy. Furthermore, finding a provider that can also deliver added benefits of remote psychological and GP support services is a great option. Use of private remote GP services has increased by 90% in the last 12 months and use of remote psychological services has increased by a rather telling 500%. Supporting your employees effectively in this area will help them return to work faster, improve your retention rates and ensure that they have all the possible long-term support they may require.
We’ve had a mental health crisis bubbling in the UK for some time that has been drastically accelerated by the pandemic. It’s impossible to escape the intrinsic relationship between mental health, financial wellbeing, and the performance of your business. Fail to provide financial education or improve your pension scheme and mental health benefits and you could be significantly hampering your company’s progress. Only a few years ago few people had heard of the phrase ‘financial wellbeing’ but now, improving your employee’s financial wellbeing is an absolute necessity for all UK employers.
