Employee Financial Wellbeing: Why it Matters More Than Ever - OnPoint Mortgages
As the world continues to experience significant economic and societal changes, the importance of employee financial wellbeing cannot be overstated. Employers have a responsibility to prioritise the financial health of their employees, and this has become even more important in light of recent events such as the cost of living crisis.
What is Employee Financial Wellbeing?
Employee financial wellbeing is the state of an employee's financial health, including their ability to manage their finances effectively, plan for the future, and maintain a sense of financial security. It is not just about the amount of money an employee earns, but also about how they use that money to meet their financial goals.
Factors that contribute to employee financial wellbeing can include mortgage changes, debt levels, savings, investments, insurance, and retirement planning. Employees who feel financially secure and empowered are more likely to have higher levels of job satisfaction, feel more valued and engaged in their work, and have better overall mental and physical health.
The impact finances can have on Employees and Their Mental Health
Financial stress can have a significant impact on an employee's mental health. The uncertainty and anxiety caused by financial hardship/lack of financial clarity can lead to decreased job satisfaction, increased absenteeism, and even depression. In fact, studies (see below) have shown that financial stress is one of the leading causes of mental health issues in the workplace.
CIPD (Chartered Institute of Personal Development) research has shown that when employees experience financial stress, their wellbeing and job performance suffer:
Over a quarter (28%) of people already say money worries have impacted their work
performance, most commonly through lost sleep, health problems such as stress or anxiety, and finding it hard to concentrate or make decisions at work.
Almost a third (29%) of employees say cost-of-living-related financial worries have negatively impacted their productivity at work.
This stress can lead to decreased productivity, increased absenteeism, and higher staff turnover.
The role of the employer
Employers who prioritise employee financial wellbeing and provide support can help to alleviate some of the financial stress that their employees may be experiencing. By offering resources and benefits such as financial education, employee assistance programs, and access to financial advisers, employers can promote a culture of financial wellness and support their employees' mental health.
Financial Wellbeing Programs (FWPs) are a valuable resource for employers to include in their overall financial wellbeing strategy, aimed at helping employees plan for their financial future. These programs provide confidential counselling services to employees who may need guidance in financial planning and decision-making. FWPs can be particularly effective in raising awareness of financial planning, and helping employees to develop financial skills and knowledge that can positively impact their overall wellbeing. By promoting financial literacy and planning, FWPs can help employees to feel more in control of their financial futures and reduce stress and anxiety related to financial matters.
FWPs can offer a variety of services, including referrals to expert financial advisors to achieve their financial goals. Referrals to financial advisors can also be beneficial, as these professionals can provide expert advice on protection (life insurances), mortgages, investing, retirement and estate planning, and other financial matters.
How employee benefits can be used to offer financial protection
In addition to the FWPs, another option employers have to increase employee financial wellbeing is offering employee benefits as part of a renumeration package.
Benefits such as death in service, group critical illness, and private medical insurance (PMI) can help to reduce financial stress for employees by providing them with financial protection and support in the event of a serious illness or death.
Private medical insurance (PMI) is a benefit that provides access to private healthcare services, such as consultations, diagnostics, and treatments. This can help employees to receive prompt medical attention when they need it, without having to worry about the cost of private healthcare services.
Death in service is a benefit that provides a lump sum payment to an employee's designated beneficiary or beneficiaries in the event of the employee's death. This payment can provide financial security for the employee's loved ones.
Group critical illness cover is a benefit that provides a lump sum payment to an employee if they are diagnosed with a critical illness covered by the policy. This payment can help to cover the cost of medical treatment, rehabilitation, and other expenses associated with a serious illness, helping to reduce the financial burden on the employee and their family.
Income protection is a benefit that provides a regular income to employees who are unable to work due to illness or injury, helping to cover everyday living expenses such as mortgage payments, bills, and groceries.
Conclusion
In conclusion, employee financial wellbeing is a critical component of overall wellbeing, and it is essential to address it in the current economic climate. Employers can play a vital role in promoting financial wellbeing in two main ways:
Provision of Financial Wellbeing Programs with the support of third-party financial experts aimed at providing the right support to employees to either work through financial issues or proactively planning for future financial goals.
Provide employee benefits to reduce financial stress and uncertainty.
Sources:
(1) https://www.cipd.co.uk/knowledge/strategy/reward/surveys - CIPD Reward Management Survey, 2022
Risk Warnings
Life Cover (Non-Investment) and Income Protection - The plan will have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
Critical Illness Plans - The policy may not cover all definitions of a critical illness. For definitions of illnesses covered please refer to the Key Features and Policy Documents.
About the author and OnPoint Mortgages
Akash is a Director of OnPoint Mortgages and heads up the Insurance division. His focus is on supporting businesses with their financial resiliency at employee, business and director level.
Established in 2016, OnPoint Mortgages is a finance company aimed at supporting its clients with obtaining funding for property acquisition and Life insurances. Based in West Sussex, the company in 2022 wrote £110 million in lending.
OnPoint Mortgages a trading style of L&D Mortgages Limited is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Registered address: 25 Homefield Road, Bushey, Hertfordshire, WD23 3AP. Registered in England & Wales under 10500099
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Approved by In Partnership FRN 192638 April 2023