Boosting Employees’ Financial Wellbeing During a Cost of Living Crisis

Boosting Employees’ Financial Wellbeing During a Cost of Living Crisis
Boosting Employees’ Financial Wellbeing During a Cost of Living Crisis

Food prices. Energy bills. Mortgage rates and rent. With costs rising across the board, it’s no secret that many people are struggling to stay on top of their finances in the current climate.

As an employer, financial wellbeing is one of three core areas where you should look to offer support through employee benefits – alongside physical health and mental wellbeing. While salary increases to keep up with inflation should be your first port of call where possible, offering a comprehensive mix of valuable, relevant employee benefits can go a long way in helping your employees to improve their financial wellbeing through both immediate support and long-term peace of mind.

Why Invest in Employee Benefits During a Cost of Living Crisis?

While many companies will be looking to reduce costs amidst a struggling economy and looming recession, cutting back on benefits can be a double-edged sword. Although you might see an immediate return through reduced spending, employee wellbeing and engagement could suffer – resulting in declining performance and productivity.

Businesses with limited employee benefits could also struggle to retain employees. As reported in HR Review, over 23% of workers are planning to change jobs this year. Should this forecast become reality, businesses could be hit with huge recruitment costs in 2023. According to research cited in HR News, the average cost of replacing an employee earning over £25,000 a year is around £30,614.

So, if your company employees 300 people and sees a turnover rate of 23%, it could cost you over £2 million just to maintain your existing headcount. But by investing in a selection of tangible, valuable benefits to boost employee wellbeing and total compensation, you can help reduce turnover rates and recruitment costs by giving employees more reasons to stay.

Choosing the right benefits mix to support employees and deliver a strong return on investment is rarely easy, with many options and schemes to choose from. Here are some of the top benefits for you to consider to support your workforce’s financial wellbeing.

1. Retirement Planning 

Supporting employees to plan and prepare for the future can be a great way to provide financial peace of mind and increase employee loyalty. According to research cited in Investment Week, 25% of the UK workforce are forfeiting their pension contributions as they look to boost their monthly paycheque.

Where possible, you might consider increasing the company’s level of contribution, enabling employees to reduce their own payments while maintaining their pension. In the UK, the minimum total pension contribution is 8% of the employee’s salary. Typically, employees will pay in 5%, while their employer tops up the remaining 3%. Increasing the company contribution could be a huge differentiator when attracting new recruits, while helping to retain employees and improve their financial wellbeing in both the short-term and long-term.

To get the maximum return on contributions made by both the business and the employee, it’s important you have the right pension plan in place. Consider the scheme’s tax relief method, default investment funds and their performance, and any additional charges such as exit fees – and speak to a qualified adviser if you’re unsure of which plan is best for your workforce.

In addition to offering the right plan and contribution levels, providing access to educational and advisory services to help your employees understand and manage their pension plan can be hugely valuable. The options range from online educational resources to one-to-one advice from a qualified pensions adviser to help your employees become more comfortable with their retirement planning objectives and plan for the future.

2. Health & Wellbeing Benefits

With the NHS under significant strain, resulting in long waiting times for treatment, providing comprehensive health benefits – such as health insurance – can support your employees to access the care they need, when they need it.

But health benefits can also help improve employees’ financial wellbeing. For those employees currently funding, or considering taking out, their own health insurance policy, funding a company plan as an employee benefit can save your workforce hundreds – if not thousands – a year.

Health cash plans are also a great, and affordable, way to help your employees fund their more day-to-day healthcare needs. You pay a set fee per member, and employees can reclaim the cost of treatments like dental, optical, physio and health screenings up to a set amount. Depending on the plan you choose, employees could save hundreds a year through a health cash plan. These plans offer a different kind of support to health insurance, so are best used in conjunction with an insurance plan – rather than as a substitute.

Another popular wellbeing benefit is gym memberships. As people look to curtail their spending, costly gym subscriptions could be one of the first things to be cancelled. By either fully funding employees’ gym memberships, offering access to discounts, or allowing employees to pay through salary sacrifice, employers can support their workforces to stay fit and healthy, while reducing spending.

Of course, it’s vital these benefits are communicated clearly and regularly to ensure your employees know what’s available to them and how they can access the benefits – otherwise, you could find you’re investing in benefits that aren’t used, despite being valuable.

3. Life & Sickness Protection

Financial wellbeing isn’t just about providing support in the short-term – offering protections for employees and their families in the event of sickness or death can provide peace of mind that they and their loved ones will be financially supported should the worst happen.

Income protection and critical illness cover are hugely valuable benefits to offer your workforce. Not only can they be costly to fund privately, but they provide a welcome reassurance that your employees won’t be left desolate if they become seriously ill. While income protection and critical illness cover offer protection for similar circumstances, they are distinctly different: income protection usually provides monthly payments to the employee when they’re unable to work, typically calculated as a percentage of their salary; critical illness cover pays out a one-off lump sum if the employee is diagnosed with a specific illness.

Likewise, providing life cover as an employee benefit can reassure employees – particularly those with families – that their loved ones will be cared for financially if they were to pass away. There are a few different options for this kind of cover, including life insurance (which covers members for the duration of the policy), life assurance (which covers members for their whole lives) and death-in-service (which normally pays out a multiple of the employee’s salary if they die while employed at the company).

It’s important to acknowledge that life cover may not be a priority for all employees, depending on their circumstances, so offering flexibility in their levels of cover can help meet everyone’s needs more closely.

The options for life and sickness cover are vast, and deciding which types of schemes you want to offer and the specific plans to choose can be hugely complicated. If you’re looking for new cover for the first time or to change to a better plan, we recommend speaking with a qualified broker to help you choose the best plans for your business and workforce.

4. Budget Support

If you’re looking to provide more immediate support for your employees’ finances, there are a few benefits you can offer to ease the strain on their wallets.

There are several options on the market for giving employees access to retail and hospitality discounts, including cashback on purchases and discount codes for everything from groceries and clothing to holidays and cinema tickets. In some cases, a discount scheme may be included with one of your other benefits – such as a health cash plan – so be sure to check what you already have and remind your workforce what’s available to them.

Additionally, you can help ease employees’ spending by offering support for essentials through perks such as free or subsidised meals, free car parking, or contributions towards commuting costs. The options are endless, and the mix of benefits that works best will depend on the specific needs of your workforce, so consider consulting with your employees before making a final decision on perks.

Providing financial education and wellbeing workshops can also support employees to manage their finances, create a personal budget and reduce spending. There are many options to consider, from online tools and resources to in-person workshops and access to a qualified financial adviser. If you have an Employee Assistance Program in place, your employees may also be able to call the hotline to discuss any financial issues.

5. Salary Sacrifice Schemes

If your business is working with a limited budget for employee benefits, giving your workforce access to salary sacrifice schemes can help them save money through reduced tax payments, without costing the business.

Salary sacrifice schemes operate on an opt-in basis, so employees can choose the plans that meet their needs. There are many different schemes available: the main ones include tax advantage benefits like cycle to work, electric vehicles, pension advisory services, and pension contributions. Since you can offer these at little or no cost to the business, you may wish to offer a wide range of salary sacrifice options for your employees to choose from. If you do opt for a wide range, it might be worth exploring what tech solutions are available to help communicate and manage those benefits alongside your core benefits, such as Eppione’s Employee Benefits platform.

It’s important you have the right benefits in place to support you employees’ overall wellbeing, including financial. But it’s just as important to make sure those benefits are communicated to your workforce effectively, with continuous access for employees to view and amend their benefits selection as their needs change.

According to research cited by Employee Benefits, 31% of HR leaders say their employees don’t understand their benefits, while 40% of employees find their company’s benefits communication ineffective. When this is the case, all the hard work and budget you’ve invested could go to waste.

When it comes to financial wellbeing, the priorities of each employee could be vastly different to each other. While those approaching retirement might be focused on pension planning, those just out of university might prioritise discounts and budgeting support. The key is to offer choice from a wide range of valuable benefits, with a platform that supports flexible benefits to let your employees choose the benefits that benefit them.

To find out how Eppione can support your business to manage, maximise and monitor your employee benefits, get in touch using the form below: