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Why Employee Financial Wellbeing Really Matters

Ben Hollingdale

Employee wellbeing has increasingly been thrown into the spotlight. Recent reports highlight the challenges and potential repercussions both globally and for the UK market if employers do not have a plan to tackle this important subject.

 

The UK government commissioned a report entitled “Thriving at Work1” which evaluated what employers can do better to support their employees. The report found that poor mental health, including anxiety, stress and depression, is estimated to cost employers between £33 billion and £42 billion a year, with an annual cost to the UK economy of between £74 billion and £99 billion.

 

The report goes on to state that of the 526,000 workers who are estimated to suffer from work-related stress, anxiety and depression, 44% of cases are thought to be caused by employee workload. Further analysis, however, suggests that binary, isolated causes cannot be attributed to these statistics alone. In reality, it is thought that a combination of factors affecting employees, both inside and outside the workplace, dramatically affect employee happiness, wellbeing and ultimately productivity. One of the contributory factors is financial wellbeing.

 

“Four in ten UK adults have no more than £500 in savings, whilst the Office of National Statistics suggests that 16.5 million people of working age have no savings at all. Many have little in the way of a safety net, meaning an unexpected turn of events, like a redundancy or a serious illness, could tip a huge number of families into crisis. So perilous are people’s finances that even a 2% hike in interest rates could be enough to push many over the edge”.

 -Paul Barrett, Head of Wellbeing, Bank Workers Charity, January 2017

 

The above quote highlights the scale of financial problems faced by UK employees. On an individual level, these money worries can impact a person’s mental health, their relationships, their physical health and more. Individual financial worries faced by employees also add up to directly impact employers.

 

Research conducted by Barclays in 2014 from a universe of 100 employers and 2000 employees, suggests that almost half of employees worry about their finances in the workplace, with 1 in 5 losing sleep at night as a result. This leads to a 4% diminishment in productivity, which ultimately impacts the bottom line.

 

Furthermore, 5% of surveyed employees were absent for an average of 4.2 days per year on account of illness caused by financial worries. Recent research from PwC corroborates these findings, going on to highlight how “46% of those who are distracted by their finances at work say they spend 3 hours or more per week thinking about or dealing with issues related to their personal finances”. Furthermore, the report conveys how over 50% of Millennial and Gen X employees are withdrawing retirement funds early to cover unexpected expenses, in line with data that finds that “one in six of those aged between 18 and 35 said they were unsure they would have enough money to support themselves when they stopped working”.

 

It is therefore quite clear the potential impact that not engaging with financial planning tools for employees can have on UK employers.

 

What can employers do to both empower individual employees to address their financial capability, increase resilience and wellbeing, and ultimately mitigate decreasing productivity levels?

 

A combination of assisting with increasing financial literacy in the workplace and offering benefits packages which enable employees to develop a saving mentality and the ability to compare financial products available to them.

 

Poor financial literacy can exacerbate economic inequality, as employees may undertake transactions that result in higher transactions and fees. Meanwhile, unclear and outdated benefit investing platforms may not only ‘scare off’ employees in the first place, but may result in detrimental buying decisions, triggering the vicious cycle of financial worries.

 

At Smarterly we are passionate about empowering todays workforce to make sensible long term savings decisions, allowing them to be financially resilient and independent. This is why we have worked tirelessly to develop our unique investment online proposition, which offers comparison across hundreds of ISA, Junior ISA and General investment options on one clear, easy to navigate and functional platform.

 

It allows employees to invest from as little as £50 per month or with £100 lump sum with a choice of over 90 investment providers. Projected returns, values and risk on investments are all clearly laid out, with no hidden surprises or extra hurdles.

 

Smarterly is the perfect solution for employers seeking to include a sophisticated yet straightforward financial products platform within their benefits offering, and who have employee financial wellbeing firmly embedded within their total employee wellness programmes.

 

To find out more about how Smarterly can help your employees - invest for a life less ordinary

 

Visit Smarterly.co.uk or call us to arrange a demo

 

Sources & links:

 

1Thriving at Work Report, Gov.uk, 26 October 2017

Mental health problems are forcing thousands in UK out of work, The Guardian, 26 October 2017

Work-related Stress, Depression or Anxiety Statistics in Great Britain 2017, hse.gov.uk, November 2017

One in three middle class Brits would struggle to pay a £500 bill, yougov.co.uk, June 2016

Financial Wellbeing: The Last Taboo in the Workplace?, Barclays Wealth, November 2014

2017 Employee Financial Wellbeing Survey Highlights, PwC, 2017

Four in ten millennials have no pension provision, new study reveals, The Independent, June 2017

Financial wellbeing in the workplace - why we need to be doing more, CIPD Community, January 2017

 

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