New data suggests workers expect their employers to do more on financial wellbeing
- Over six in ten employees are finding bills and credit commitments a burden
- Close to one in five employees would not be able to cover their living expenses for one month if they lost their main source of income
- Majority think that their employer should care about their financial wellbeing
- 50% who don’t currently have a workplace savings scheme are interested in one
Although the rising cost of living is stretching many households’ finances, for those who are in work and do feel able to save a little, their employer may be able to help them take steps to build greater financial resilience in the future by offering a workplace savings scheme.
Research from the Building Societies Association (BSA) highlights the vulnerable financial position of many households, with more than six in ten (61%) adults who are employed finding their bills and credit commitments a burden.
Many households have little or no resilience should they experience a shock to their income, with one in 20 employees (5%) saying they would not be able to cover their living expenses for one week if they lost their main source of income. 15% wouldn’t be able to last a month, demonstrating the lack of financial security faced by many families.
Asked whether their employers should care about their financial wellbeing, 62% of employees thought they should, but only 24% think that their employer actually does care.
Whilst recognising the recent ONS survey which reported that 43% of people will not be able to save any money in the next 12 months, introducing a workplace savings scheme for those who are in work and do feel able to save a little each month, could be one way for an employer to help their workforce to take steps to improve their longer-term individual financial wellbeing.
With a workplace savings scheme, an employee choosing to participate sets an amount to be deducted from their monthly salary after tax through payroll. This money is placed into a cash savings account that they can access at any time. By saving automatically and regularly, workers can build a pot of savings to use for emergencies, unplanned costs, a rainy day or a treat.
The increased sense of financial security that a savings buffer provides has benefits employers too. Currently more than one in four (27%) employees said that money worries have affected their ability to do their job. By helping to support financial wellbeing through workplace savings, the impact on people’s work from financial stress could reduce.
There is clearly an appetite for this type of employer support too, with half of employees (50%) who aren’t currently offered workplace savings interested in joining. Of those whose money worries had impacted their work, nearly two thirds (60%) said they’d be interested in a workplace savings scheme if this was offered to them.
For more than one in ten (13%) people interested in taking part in a work place savings scheme, it would be their first formal cash savings.
For those who already have a savings habit, most said the money saved through a workplace savings scheme would be on top of any other savings activity. 81% said that the savings would be in addition to their existing pension savings and half (50%) said any workplace savings would be in addition to their current cash savings.
Many credit unions and some building societies offer this type of account, and several building societies are actively exploring how they can help in this area.
Minister for Financial Inclusion Guy Opperman said:
“Workplace savings can play an important role in helping people to build their future financial resilience.
“It’s good to see that many credit unions and some building societies have schemes in place for employers to support people to save direct from their salary, but we now need to grow the number of providers and encourage employers to take advantage of these services to support their staff.
Sarah Porretta - Propositions, Insights and External Engagement Executive Director, Money and Pensions Service said:
“As part of our Nation of Savers strategy, we have an ambition to improve the financial wellbeing of millions of people across the UK by increasing the number of new savers on low-to-modest incomes.
“When four in ten people have less than £100 in a savings account, working with employers and providers, such as building societies and credit unions, to offer of payroll-deduction savings schemes is at the heart of meeting this challenge.
“We therefore warmly welcome the work the Building Societies Association is doing to raise the profile of workplace savings, which could provide financial resilience and security to many people in these uncertain times”.
Andrew Gall, Head of Savings at the BSA said:
“As food, energy and other prices continue to rise, it is no wonder that so many are now finding their finances stretched and are struggling with their day-to-day living costs.
“Although now won’t be the right time for many to start saving, introducing a workplace savings scheme could provide an opportunity for some to start building a savings buffer, in a simple and flexible way.
“Having a scheme in place will also help other employees who can join the scheme and start regular savings when their own personal situation allows, helping them to increase their resilience for unexpected financial shocks in the longer-term.
“For those who currently have outstanding debts such as personal loans or credit cards, we’d suggest that, if they can put a little extra aside each month, they use it to reduce these before putting into savings account, as interest will be charged on the outstanding amounts.”