Financial Wellbeing: How employers can help staff to thrive

Underlining the scale of employees’ financial worries, Caroline Drake, chief people officer at payroll and HR company, Zellis, says “more than three-quarters (77%) of employees in the UK and Ireland have experienced financial stress over the past year. Research suggests these employees are also five times more likely to take time off work and more than half (54%) say money worries have had a negative impact on their productivity at work. These statistics underline how important financial wellbeing is.”

She says that employee demand for support is growing, with 78% of the 2, 502 employees surveyed across a range of sectors in the UK and Ireland for the research would quit their job in favour of an employer who prioritises financial wellbeing.

“Despite all the evidence urging organisations to invest, only two in ten UK employers currently offer some form of financial wellbeing policy,” she says. “That is expected to change this year as more employers seek to provide discretionary benefits such as private health insurance, leisure and retail discounts, and affordable loans, as well as flexible pay (earned wage access) schemes that enable employees to access a percentage of their earnings before payday. All of these initiatives provide tangible financial support in a tough economic climate.”

New research around financial wellbeing from Champion Health’s Workplace Health Report 2024, carried out among 4,383 employees also found that employees were under increasing pressure in many aspects of their personal and professional life.Key findings include:

• financial worries claim the top spot for stress outside of work, surpassing relationship strains
• financial stress soaring from 37% to 41% of employees (percentage experiencing financial pressure)
• 27% report that money worries have impacted their ability to do their job
• male workers bear the brunt, with those experiencing heightened financial pressure at 42%, up from 36% in the previous year
• 56% of people with clinically noticeable symptoms of anxiety and low mood experience financial stress.

What can employers do to help?

Most employers cannot afford to simply give pay rises or add expensive benefits. Instead, they need to think creatively about how they can provide financial support for employees. Providing financial wellbeing services that are relevant, accessible and informative for all will provide the greatest return on investment through better financial futures, productivity and employee loyalty.

A starting point could be a short message or reminder for employees to review their investments or savings or take a particular action that helps improve their finances, says Sarah Steel, head of financial wellbeing at Cushon, which provides workplace pension and savings schemes.

“With the cost-of-living [crisis] continuing to bite, employers can support employees by ensuring they are armed with the best financial education and tools to help them with financial wellbeing,” she says. “Running employer-led financial education workshops on hot topics such as building financial resilience or understanding tax allowances is helpful, but making recordings available to employees 24/7 means they can access the information at a time and in an environment that suits them.”

Unfortunately, the continuing cost of living pressures could see people looking to reduce their pension contributions. Although this is counterproductive in the long term, in the short term many people may believe they are left with no other option. Reduced pension contributions lead to lower outcomes in retirement, meaning that people may face financial struggles in future. Good quality and engaging education outlining the impact of their decisions is therefore vital in supporting their financial wellbeing and future.

“One approach that can help is pensions salary sacrifice, which results in extra money in employees’ pay packets, all while still maintaining pension saving,” she says. “There are still too many employers who are not offering this ‘no brainer’ alternative way for employees to contribute to pensions. It offers National Insurance savings for both the employer and the employee. It enables higher rate taxpayers to receive full tax relief through payroll and allows employees to maintain their pension contributions whilst putting some extra pounds into their pay packets each month.”

The employer National Insurance savings can also be used to provide additional support, whether funding financial education programmes or encouraging employees to save into workplace savings schemes.

What benefits do employees really value?

One problem for employers is that benefits packages are not always used fully or are only valuable to certain groups of employees. An alternative approach is to personalise the package on offer to make it more cost-effective and appropriate to the individual employee.

Matt Russell, CEO of Zest, an employee benefits platform, says his company’s research has found that over half (55%) of all employees want improved financial support from their employer. For younger workers aged 18-34 who are bearing the brunt of the cost-of-living crisis, this number rises to over two-thirds (67%). Yet with many businesses unable to raise salaries in line with inflation, many are still feeling the pressure to support and reward employees.

“Benefits packages can offer a cost-effective solution for employers,” he says. “However, for this to be effective, employers need to ensure that the benefits on offer are personalised to their workforce, and the individual, if they are to provide enhanced value for money for both employer and employee alike.

“When businesses know and understand what it is that their employees want, they can then start providing bespoke packages to successfully meet their workforce’s needs. Keeping this stream of communication open is equally important, targeting employees by age, family status or other factors can help to ensure that they are up to date and fully aware of what is on offer to them, and how they can access this.

“Not only will this boost value for money, but getting benefits packages right can also enhance employee engagement, motivation and productivity. Creating a great environment to work in with a generous remuneration package undoubtedly supports talent attraction and retention. Our research finds that nearly half of all employees (46%) believe that a good benefits package is the most important thing they look for in employment.”

The business case

When it comes to employees posted abroad or on overseas business trips, helping them manage their finances is equally vital. “I do believe that employers play a role in supporting the financial wellbeing of their staff,” says James Parker, co-founder and CEO of LEONID, who has over 25 years of financial, operational and engineering expertise. “The increasing pressure to address the rising cost of living isn’t just about fulfilling a duty of care; it’s about recognising the direct impact on productivity,” he explains.

“It is clear that an employee struggling with financial stress is less likely to perform at their best. That’s why it’s essential for employers to prioritise initiatives that educate and support their workforce, whether through financial wellness programmes, access to resources like counselling services, or facilitating investment opportunities. These measures not only benefit employees personally, but also contribute to a more motivated and productive workforce, ultimately enhancing the company’s bottom line.”

He says that by providing guidance on navigating foreign financial landscapes, understanding tax implications and budgeting for expenses, employers can mitigate stress for their employees. This will help to ensure smooth operations during international assignments and could ultimately help prevent a failed assignment. This proactive approach not only enhances the employee experience, but also minimises the risk of financial disruptions that could impact business outcomes. “Investing in the financial wellbeing of employees isn’t just a gesture of goodwill. It’s a strategic imperative that fosters loyalty, engagement and sustainable success for the company,” he says.

Employee benefits can be a powerful tool for retention

As the cost of living rises, employers are facing increasing pressure to retain their staff, who are being enticed by higher salaries elsewhere. While not every business can afford to offer substantial pay increases or bonuses, many organisations can take steps to alleviate financial stress and help their employees manage financial worries.

Research by Pluxee, an employee benefits and engagement company offering personalised packages for 36 million employees, has found that employees can potentially benefit by up to £1,679 through cashback and savings offered by employer-provided schemes. Additionally, investing in benefits such as employee assistance programmes and access to independent financial advice is crucial. These measures not only reduce stress for employees, but also play a vital role in attracting, retaining and engaging talent.

“When thinking about benefit provisions, it is essential to listen to employee needs,” says Graham James, director at Pluxee UK. “Regularly reviewing and enhancing benefit offerings based on employee insights is key. Anonymous employee engagement surveys and one-to-one conversations provide valuable insights that help decision-makers understand the issues at hand.

“For example, while the leadership team might assume that the primary employee stressor is pay, the reality might be focused on work-life balance. In such cases, offering benefits like annual leave purchase can be a great option, which is not only more affordable for the organisation, but also aligns better with employee needs.”

Supporting employees who are working abroad

Working in different countries can be an exciting yet stressful experience for employees, whether that is understanding the differences in working styles, navigating new cultures and languages, finding a great place to live, dealing with taxation and pension schemes, adhering to regional regulations and rules, or truly appreciating the cost of living.

David Deacon, chief people officer at activpayroll, which provides international and multi-country payroll services, says these challenges can slow down how quickly an employee becomes effective and can impact all businesses when they move into uncharted territory.

“My experience in supporting employees and looking after their financial wellbeing is that it helps to think holistically about how to help them, whether that’s with tax planning, immediate expenses or making our policies of financial assistance as efficient as possible,” he says. “Typically, we take big changes in our stride and it’s the small financial worries, day-to-day, that cumulatively take a dramatic toll on our wellbeing.

“My advice to companies moving employees into new territories is always to seek advice from companies that have done the same thing before. It’s the unforeseen surprise that derails things. And think ahead, especially for international tax planning, by getting support from qualified professionals on topics where you do not have direct expertise or experience. Making assumptions about the rules can be expensive and distracting for everyone involved.”

He says that a transparent and forward-thinking approach to supporting employee finances works well, as does helping to manage employee expectations and talking through the figures with them.  “We find that talking through every aspect with the employee, including their obligations, our costs, and what they can expect in terms of expenses and experiences, before the work assignment starts helps them to prepare for the swings and roundabouts of working overseas.”

Red related article: Early retirement emerges as top financial goal for employees, according to study of 11.500 people around the globe