In the face of a relentless cost-of-living crisis, a new report reveals that only half of UK companies have implemented a financial wellbeing strategy for their employees.

The “Spotlight on UK Financial Wellbeing” report, conducted by Close Brothers Asset Management’s Workplace Financial Wellbeing Services, delves into the financial landscape of the UK’s workforce, uncovering alarming trends in money worries and their repercussions.

Contrary to expectations, the Financial Wellbeing Index shows an overall improvement of 6 percent when comparing pre-pandemic (2019) and post-pandemic (2023) scores.

The shift is attributed to significant improvements in specific categories, including a 37 percent increase in budgeting and planning, with 56 percent of people reporting having a financial plan compared to 45 percent in 2019.

Also, there is a 26 percent increase in financial fitness related to protection, such as emergency funds and critical illness.

Encouragingly, levels of debt among employees have decreased. In 2019, 12 percent of employees considered debt a significant issue, which has since dropped to 7 percent in 2023. However, beneath this optimistic aggregate score lies a more complex picture.

A Complex Picture

Three critical areas of vulnerability have emerged, notably concerning savings, investments, and retirement planning, with the latter experiencing a 30 percent decline. General money worries have increased, contributing to an 11 percent drop in the overall score from 56 to 50, compared to the 2019 index.

Notably, only 55 percent of employees in 2023 have an emergency fund covering three months or more of normal monthly costs, down from 70 percent in 2019. The prospect of retirement is laden with uncertainty, as almost a quarter of employees (23%) have recently changed their retirement date, with 18 percent deferring it.

Impact on Wellbeing in the Workplace

The impact of financial concerns on employee wellbeing is evident, with over a quarter (28%) expressing unhappiness with their finances. Women (32%) and those aged 35-44 (31%) are particularly affected. A concerning 43 percent of employees admit that money worries make them anxious, and 22 percent report it affecting their mental health. Sleep loss due to financial concerns affects 19 percent of employees, impacting decision-making for 13 percent.

In the workplace, the consequences are pronounced, as 87 percent of employees confess that money worries affect their work, especially among younger generations (36% of those aged 25-34 and 36 percent of those aged 18-24).

Companies Falling Short in Financial Wellbeing Support

Despite 75 percent of businesses having an overall wellbeing strategy, the report highlights that only half of them have a dedicated financial wellbeing strategy. Intriguingly, financial wellbeing ranks 12th on the list of the biggest issues facing organisations, despite its clear importance during the ongoing cost-of-living crisis.

Jeanette Makings, Head of Workplace Financial Wellbeing, commented on the findings, stating, “…an increased focus on financial wellbeing could improve not only financial wellbeing but mental wellbeing and overall wellbeing too.” Makings emphasises the need for companies to recognise the impact of financial worries on both individuals and business productivity and advocates for increased attention and resources towards financial wellbeing in comprehensive wellbeing strategies.

As the cost-of-living crisis continues, it is imperative for companies to address the financial wellbeing of their employees to enhance overall workplace satisfaction and productivity.

The report sheds light on the critical need for a more comprehensive approach to financial wellbeing strategies, considering its intricate connection with mental health and the overall wellbeing of employees.

 

 

 

 

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.