Time for employers to step up on financial wellbeing – discussion with Personal Group Chief Executive Deborah Frost, and Deborah Ware, COO at Financial Wellness Group.

We hosted a very timely webinar, covering why and how employers should be supporting their staff with financial wellbeing. We’ve summarised key discussion points below for those who couldn’t attend on the day.

Our panellists

Deborah Frost, Chief Executive at Personal Group, was joined by Deborah Ware, Chief Operating Officer at Financial Wellness Group, one of the UK’s leading providers of free debt advice.

The state of play

The COVID-19 crisis has led to significant economic disruption for UK workers. Many employees may have suffered income shock as a result of themselves or a member of their household being furloughed, on reduced hours, or losing their job.

Many workers will be feeling financially vulnerable, with a knock-on effect to their mental health, and ultimately their performance at work. It’s important to note that financial vulnerability doesn’t just affect those working in industries like hospitality which have been particularly hard hit; employees at all pay levels are vulnerable to a drop in household income.

Now more than ever employees need support in improving their overall financial situation and employers are well-placed to deliver that support.

The challenge facing UK workers

More employees than usual will be facing financial difficulties, thanks to a perfect storm of factors:

• Greater numbers on furlough. Following news of a national lockdown from 5th November, the government has extended the furlough scheme for another month, paying 80% of wages for employees unable to work due to the pandemic. Again, even if the employee is not affected themselves, a reduction in income for another member of the household can disturb their overall financial stability.

• Rise in unemployment. There is a consensus among economic forecasters that the UK is likely to see a rise in unemployment to 7.5% in the coming months. Even if their own job is unaffected, employees are vulnerable should a partner or other wage earner lose their job, especially if they don’t have savings to draw on. 

• Payment holidays (for some). Following news of another national lockdown from 5th November, the FCA have extended payment holidays on mortgages, credit cards, car finance, personal loans and pawned goods. This will come as a relief to people facing a drop in income, but it’s not a silver bullet. Customers who had not yet deferred a payment can now request one for up to six months, but those who have had their payments deferred already can only extend until they reach the six-month limit.

• Repayments due. Research carried out by StepChange debt advice charity in June shows that since the beginning of lockdown in late March, around 4.2 million people had borrowed to make ends meet, mostly by using a credit card, overdraft or a high-cost product such as a payday loan. For households recovering from a drop in income, these repayments are an additional pressure.

• Mental health pressure. There is an established link between money and mental health, and money worries can have a serious impact on our physical and mental wellbeing – whether through losing sleep, lack of focus, stress, depression or other mental health conditions. Employees dealing with financial pressure may be trapped in a downward spiral where their poor mental health is making managing money harder and worrying about money is making their mental health worse.

The impact on employers

Employers would benefit from recognising the extent of the challenge facing their workforce. It’s in employers’ interests to support people so they can continue performing at their best, by offering help before money problems become unmanageable.

This early intervention approach is key to financial wellness. By pursuing a strategic rather than reactive approach, you are giving your workforce the best chance of remaining healthy and productive, even in exceptional circumstances.

The hidden cost

Presenteeism - where employees are at work but aren’t functioning at 100% because of health or other issues – is a widespread problem. Furthermore, financial stress is a key cause of this productivity drop, with one in four UK workers reporting to the CIPD that money worries have affected their ability to do their job.

As financial stress can affect both employees’ work and personal lives, employers are fully justified in offering support with financial wellness. Far from treating employees’ finances as a purely private matter, employers are waking up to the fact that they can and should offer greater support. We’ve started to see this with employee benefits packages and stakeholder pensions – financial wellbeing is the logical next step.

To find out more about supporting your employees with financial wellness, you can call Personal Group on 01908 605000 or email [email protected].