To mark Talk Money Week (18th– 22nd November), Howden Employee Benefits & Wellbeing (HEBW) has published a new independent ‘Workplace Finance’ report on the solutions offered by three of the main workplace finance providers in the UK, (Neyber, FairQuid and Salary Finance).
The report aims to help employers understand the workplace finance solutions and tools available, how they work and the most relevant options for their employees who are experiencing financial issues.
It highlights that the growing popularity of workplace finance solutions in recent years may have been driven by rising levels of personal debt levels and wage stagnation that many people have experienced since the financial crisis in 2007/8.
The Joseph Rowntree Foundation[i] suggests one in eight workers are now in poverty, and the Money Advice Service[ii] reports that one in five (21%) adults say they are drowning in debt and money worries, with many saying that their mental health has deteriorated as a result.
Howden Employee Benefits & Wellbeing’s report suggests people who are in debt tend to turn first to more traditional loan providers, but if they have poor credit scores, they may be declined and/or then seek providers of high interest repayment loans which can be hard to meet and may increase their debt in the long term.
Steve Herbert, Head of Benefits Strategy commented, “The rise in personal debt and financial stress can have a major impact on the workplace. A financially stressed and tired employee is likely to be less focused, engaged and productive, so it’s in an employer’s interest to support employees experiencing personal finance issues.”
“We’re seeing more employers taking positive steps to support employees by introducing financial education programmes which can help employees to better understand and manage their monthly finances.”
“However, if an employee is already in debt and struggling to meet high interest loan repayments, then restructuring the borrowing to lower levels of interest may make the repayments more manageable. Workplace finance solutions used alongside financial education can be invaluable as they offer access to lower cost finance than some pay-day lenders, with more affordable repayments. These can help people resolve their debt issues and reduce financial stress.”
The report highlights workplace finance solutions can also be helpful for major and often unexpected costs that can’t be met out of an employee’s everyday budget, such as the family car needing urgent repairs or the boiler breaking down.
The key advantage of workplace finance solutions is that lending decisions are based on more than an individual’s credit scores and affordability. Lenders consider someone’s employment status, service history and salary level and, as repayments are directly deducted from salary via payroll, they have more confidence the loan commitments will be maintained.
Workplace Finance Solutions also have other useful features, such as short-term savings vehicles, with contributions deducted via payroll, as well as credit score checkers and information about where to access debt management advice and online financial tools.
Herbert concludes, “Increasingly, employers are understanding the vital role of financial education in supporting employee wellbeing. But hand in hand with financial education, workplace finance can be a fantastic solution to help employees resolve debt issues. More organisations are now looking to include these solutions within their employee benefits and remuneration packages and our independent report will help them make informed decisions about the most appropriate solution for their workforce.”
Howden Employee Benefits & Wellbeing’s Workplace Finance report is free to financial education clients.
For more information, please contact: Vicky Peduzie, Workplace Savings Operations Manager at: [email protected].