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The employer’s guide to financial wellbeing in the UK

When it comes to the UK’s financial wellbeing, the numbers are indeed staggering: more than half of working-age adults don’t understand enough about pensions to make decisions about saving for retirement. But what does financial wellbeing entail? And why should employers care? Today’s article by Pacific Prime UK addresses these questions, as well as provides you with financial wellbeing benefits to implement.

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A word about employee wellbeing initiatives

Before we delve into financial wellbeing, it’s vital to be clear on employee wellbeing (also known as employee wellness) initiatives in the workplace. This is a holistic approach that considers the full spectrum of physical, mental, and emotional health. As such, financial wellbeing is a subset of employee wellbeing.

Defining financial wellbeing

Financial wellbeing is a state of mind that occurs when an individual feels secure in their finances and financial capability. It encompasses a range of factors including the ability to manage one’s expenses, make smart investments and decisions, as well as set aside funds for a rainy day.

State of financial wellbeing

As alluded to in the introduction, financial wellbeing in the UK is rather low. A 2018 survey of working-age adults conducted by the government-backed Money and Pensions Service revealed many insights, including the following key points:

Day-to-day: 21% rarely or never save, while 22% have less than £100 in savings and investments. What’s more, 17% often use a credit card, overdraft, or borrow money to buy food or pay for bills.

Confidence: 47% don’t feel confident making decisions about financial products and services. Moreover, only 27% of working-age adults are over-confident in their ability to use numbers in everyday life.

Planning ahead: 55% of working-age adults don’t feel that they understand enough about pensions to make decisions about saving for retirement. Likewise, 43% of adults age 65+ don’t know how they would manage financially if they had to go into long-term residential care.

Importance of financial wellbeing

Individuals who experience financial wellbeing will be less stressed about money, which leads to them feeling happier and healthier. This reduces absenteeism and presenteeism in the workplace, as they take fewer sick-leaves and work more productively. To top it off, the overburdened NHS and the economy will also benefit as a result.

Strategy for financial wellbeing

Given the importance of financial wellbeing, the Money and Pensions Service launched a 10-year vision in January 2020 to help individuals with their finances. The strategy consists of “five agendas for change”:

  • Financial foundations: Increasing the number of young people who receive financial education.
  • Nation of savers: Increasing the number of working adults who save regularly.
  • Credit counts: Decreasing the number of people who pay for food and bills using credit.
  • Better debt advice: Increasing the number of people accessing debt advice.
  • Future focus: Increasing the number of people who can plan for their finances in the long-term.

Impact of the COVID-19 pandemic

The COVID-19 pandemic has caused the unemployment rate in the UK to rise up to 4.9% in the three months to October 2020, with 370,000 people made redundant. Even though the furlough scheme has been extended, this serves to emphasize the importance of financial wellbeing.

Ted Wilson, director of the Institute for Employment Studies think-tank, said in a FT article that:

“The labour market remained very fragile on the eve of the second lockdown. While today’s figures [aforementioned unemployment rate] could have been worse, they are unlikely to get better any time soon.”

Promoting financial wellbeing at work

To help employees achieve financial wellbeing, employers can implement financial wellbeing benefits. Apart from the spillover effects to employee productivity, this will ensure that employers can attract and retain the best talent. The benefits chosen should largely depend on the needs of your employees, but here are some ideas to help you get the ball rolling:

  • Savings and investment advice: Organizing talks and/or counselling employees on how to better manage their money will help them feel more in control of their finances.
  • Freebies: Whether it’s free gym memberships, employee discounts, or any similar program, employees’ day-to-day expenses can be lowered through freebies.
  • One-off cash grants: A lump sum of money can go a long way for employees in particular life stages – for example, when they get married, when they have a child, etc.
  • Retirement planning: Nobody wants to work forever, so help employees understand how their pension works, and suggest ways to make their retirement more comfortable.

Design tailored employee benefit solutions today

Want to learn more about financial wellbeing benefits? Download our Global Employee Benefits Trends Report 2020 as it’ll help you understand the generational divide in the workplace, as well as their respective financial woes. For more specific and personalized advice, you are also more than welcome to get in touch with Pacific Prime UK.

As a health insurance broker and employee benefits specialist, we are experts in helping companies of all industries and sizes implement corporate health insurance and employee benefits solutions. We believe in a tailored and streamlined approach, taking into account your needs and budget, as well as using technology to simplify the plan administration.

Contact our corporate team to learn more!

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Content Creator at Pacific Prime UK
Suphanida aims to demystify the world of insurance by creating informative and engaging content. As a wordsmith, she spends the majority of her day writing and editing website content, blog posts, in-depth guides, and more.

Outside of work, Suphanida enjoys travelling to new places and immersing herself in different cultures.