Poor financial wellbeing 'costs employers £6.2bn'

Money worries can affect a person's ability to perform well in their job -- and new research highlights the cost of this for employers.

A white paper from Aegon UK suggests that poor financial wellbeing among employees is costing UK employers as much as £6.2bn in lost revenue every year as workers take time off or are distracted from their work due to financial anxiety.

With the cost of living continuing to rise, many more workers are likely to find it hard to maintain a decent standard of living. But employers can make a difference -- and increasing pay isn't the only way they can help.

Even employers with a limited budget can do their bit with a simple policy that lets their workforce know where and how to get help, explains the CIPD.

The moral and business case for supporting employee financial wellbeing has never been stronger, says the HR body. It's an integral part of creating a healthy workplace where people can flourish, reach their potential, and make a significant contribution to their organisation's performance.

When planning your financial wellbeing policy, these three simple steps are a good place to start:

1. Let your workforce know that they can get free, confidential and independent money and debt advice from the government's Money and Pensions Service.
2. Make sure your workforce is fully aware of all the benefits you currently offer and how to make the most of them.
3. Start to normalise conversations about money worries at work; showing concern and empathy can help to break down any stigma.

Once you've got these basics in place, you can expand your financial wellbeing policy to include a commitment to paying a fair and liveable wage, supporting in-work progression, enhancing your benefits package, and offering financial education.

"CIPD research finds that employees working in a company with a financial wellbeing policy report being more likely to feel in control of their finances," Jonathan Boys, labour market economist at the CIPD, told People Management, adding that "so-called 'fringe' benefits" that help with the cost of housing, travel or childcare could be particularly helpful for lower earners.

The research by Aegon UK highlights how employees' financial wellbeing is under pressure on all fronts, from the recent economic shocks to the growing cost-of-living crisis.

As many as 4 in 10 people say they have less than £100 left at the end of the month. And nearly half (49%) of UK workers are now less confident about retiring, believing their current pension provision will not be enough to provide a good standard of living by the time they retire. All this is affecting levels of anxiety and, in turn, mental wellbeing.

"Giving employees a sense of financial security has never been more important," said Linda Whorlow, managing director of Workplace at Aegon. "Since March 2020, the mental and physical wellbeing of employees has been in sharp focus, and there is a growing need to consider financial wellbeing too."

Whorlow added that benefits packages are "front and centre" in this with employees rethinking their attitude to work and the type of employer they want to work for.

"Employers can make a huge, and positive, difference to employee morale and engagement by redesigning their benefits package from a financial wellbeing perspective, focusing on better financial outcomes."