During this month’s Talk Money week[i], organised by the Money and Pensions Service, a concerning trend emerged – nearly 8 in 10 UK employees bring their financial concerns to work. This year, the campaign’s focus was on the financial challenges people have faced since the pandemic and the cost-of-living crisis. This strain is not only affecting people’s financial health but also how they do their job.
Punter Southall’s latest annual survey of and for HR professionals found 38% said poor financial wellbeing affects their employees, with just over a quarter (26%) saying it affects the 18-30 age group the most. The survey also reinforced a growing need for financial education in the form of easily understandable and accessible guidance and information.
And the need for this is as pressing as ever, as the Money Advice Service reveals 39% of UK adults (20.3 million) lack confidence in managing money, with 11.5 million having less than £100 in savings, and nearly nine million in serious debt.
Addressing these challenges in the workplace doesn’t have to be complicated or costly and will, ultimately, improve not only the lives of your people but their productivity, energy levels and outlook.
The impact of financial stress
According to the Mental Health Foundation, money worries are the most common cause of anxiety, and they can have a major impact on how people perform at work.
A recent report from Unmind[ii] highlighted that financial stress can have a direct impact on workplace anxiety and productivity, causing a quarter (27%) of employees to experience ‘brain fog’ and make more mistakes at work. The data found that more than half (53%) indicated that the mortgage rates and cost of living crisis were negatively influencing their ability to do their jobs as normal too.
The Unmind survey also found that many respondents felt financial stress was harming their capacity to care for their mental (39 per cent) and physical (31 per cent) health, with some appealing to their employers for support. But despite this, 42 per cent said their employers had not assisted in dealing with the ongoing problems caused by rising housing costs and mortgage interest rates, while only 16 per cent had access to online mental health resources and only 14 per cent were aware of the existence of employee assistance programmes.
Taking action to enhance financial health
Taking a proactive approach can make a real difference, helping younger employees to budget and save for the future and enabling those nearing retirement to make informed decisions about life after work. This sets the stage for a financially resilient and engaged workforce.
Companies can make a meaningful impact by implementing the following strategies:
- Educational workshops: covering essential topics such as debt management, budgeting, and retirement planning. Tailor these sessions to different age groups and financial stages, enhancing knowledge and confidence in areas like savings, investments, and pensions.
- Retirement planning tools: provide tools to help visualise retirement lifestyle. These can illustrate the benefits of paying more into a pension and encourage better financial planning. They can also guide employees to make strategic decisions about their future, starting from the beginning of their careers.
- Tailored education: recognise that employees evolve through various life stages. Offer workshops, access to guidance, advice that adapt to these changes, maximising engagement.
- Simplify communications: ensure pension information is simple and digestible as most of us can be deterred by complicated language. For example, clearly laying out how a member benefits from what the employer pays in and how it is favoured by the tax man can incentivise a saving habit.
- Pre-retirement support: many employers provide good pension schemes, but communications and guidance don’t always help members make the most of what they have. Provide access to quality information and support for informed choices, especially as decisions during this phase can often have irreversible financial consequences.
- Guidance on annuities: for those nearing retirement, provide more information about annuities as they offer one option for a guaranteed income for life. Bridging the knowledge gap around annuities through accessible tools and resources can empower employees to make more informed decisions.
- Employee Assistance Programmes (EAPs): check if your EAP Includes financial wellness components as these programmes can offer confidential counselling and support for employees dealing with financial stress.
- Discount programmes: check if your employee benefit provider offer employee discounts on essential services, such as retail, banking, insurance, or wellness programmes as these could ease the financial strain for employees.
- Regular check-ins: schedule regular catch-ups or surveys to gauge the financial concerns of employees. This helps you tailor any financial wellbeing programme to address the specific needs of your workforce.
- Mental health support: Recognise the connection between financial and mental health. Provide resources and support for employees dealing with stress or anxiety related to their financial situation.
Providing education, guidance, and access to financial tools can deliver immediate benefits, significantly improving employees’ day-to-day financial circumstances.
Offering guidance on decisions for later life will also strengthen the employer-employee relationship, positioning your people for better financial standing throughout their careers and into retirement. Demonstrating a commitment to employee wellbeing sends a powerful message, positively impacting recruitment and retention efforts.
Steve is the CEO of Punter Southall Aspire. Steve is a Chartered Manager and Fellow of the Chartered Management Institute. Steve is a regular writer and speaker on intergenerational working, retirement and older worker business management issues and is passionate about integrating simplicity, flexibility and innovation into well-designed investment and savings solutions.