The vast majority of UK employees are suffering from money worries (94%), with more than three quarters (77%) of employees saying that money worries impact them at work, according to new research from Close Brothers. This means that around 25 million1 are affected by money worries while at work. Additionally, two in five (40%) employees worry about their finances always or often.
The inaugural Close Brothers’ Financial Wellbeing Index assesses the financial wellbeing of UK employees across the seven key areas of financial health and reveals the average score for UK employees stands at just 53.6 out of 100 – highlighting the urgent need for action. Surveying more than 5,000 employees and more than 1,000 employers, the data gives a comprehensive insight into the true state of Financial Wellbeing in the UK and will be an essential tool for those aiming to diagnose and improve workplace financial wellbeing.
The seven areas of personal finance, include budgeting and planning, debt, protection, savings and investments, retirement planning, properties and mortgages, and tax. The lowest scoring areas, which dragged down the overall index score, are protection (42.5), budgeting and planning (48.8), and tax (48.5).
In these areas, of particular concern is that over a third (34%) of people are unprepared for unexpected financial costs or a loss of income. The third biggest money worry was coping financially if they lost their job, but fewer than one in ten (8%) employees have purchased an income protection product. When considering that a big part of financial wellbeing is being confident in achieving financial goals, over half (55%) of employees do not have any sort of financial plan, and three quarters (76%) of employees don’t know what tax allowances and reliefs are available to them or have some awareness, but are not sure if they are taking full advantage of them.
The debt story looks more positive than other surveys that focus primarily on that issue, despite employees’ second biggest money worry being paying off debt. More than two fifths (42%) say that debt is not an issue for them and 59% of employees are confident in knowing where to get help or advice if they have debt issues. But there does remain an underlying issue that needs to be addressed – there is a cohort of around one in eight employees (12%) for whom debt is a significant issue.
Poor financial wellbeing is also having a significant impact in the workplace, as revealed by the findings. Looking at specific groups within the workplace, 87% of millennials, and 72% of those age 35-54 admit that money worries affect them while they’re at work. Those aged 55 and over are the demographic that suffer the least, but still almost half (47%) of this cohort worry about money while at work.
Employers understand that their businesses are suffering as a consequence, with around nine in ten (89%) larger UK businesses impacted by poor employee financial wellbeing – this equates to 2.4 million UK businesses2.
Organisations are already feeling the strain from the lack of financial wellbeing on multiple fronts including: reduced productivity (22%); loss of talent (22%); higher short-term and long-term absences (both 19%); reduction in retirees (17%); and higher healthcare costs (13%).
However, steps are being taken to tackle the issue with 45% of employers currently providing some workplace financial wellbeing strategies. In addition to reward and pensions, the top five benefits that employees are offered to help improve their financial wellbeing are: discount vouchers for lifestyle expenditure (17%); financial advice (13%, although only 6% funded/part funded by the employer); retirement seminars (12%); employee assistance programmes (12%); and workplace loans (6%).
Jeanette Makings, Head of Financial Education at Close Brothers said:
“Money worries don’t just affect an individual’s financial health; they are one of the single biggest causes of stress, impacting mental and physical health if left unchecked. They are also an issue for businesses with lower productivity, higher absenteeism and higher staff costs which hurts business performance. Doing nothing is no longer an option.
“Employers are perfectly placed to play a significant role in making a difference to the UK’s financial health. Their reward and benefits help fund employees’ lifestyles; employers can reach large numbers of people with communications that are trusted; and employers can procure benefits and financial education, advice and investment solutions to help their employees improve their financial wellbeing. Yet despite the growing awareness of the need for workplace financial wellbeing, organisations seem to be struggling to find clarity, transparency, and meaningful measurement on this issue.
“Financial wellbeing is incredibly personal and affects each of us differently; not only because of our financial circumstances but also because of our attitude to both money and stress. For the right outcome, providing education and advice to address all seven areas of financial health and for all employee groups will deliver tangible results for both individuals and businesses alike.”
Professor Sir Cary Cooper, a leading expert in workplace wellbeing, ALLIANCE Manchester Business School, University of Manchester said:
“As wages have not kept up with inflation, the cost of living rises and the elimination of the final salary pensions, many more people are worrying about their finances. Although many businesses have made great strides to look after the mental wellbeing of their employees over the last decade, not as many employers have supported their financial wellbeing. And given that employees have said their money worries are affecting them at work, this is a bottom-line issue.
“Providing advice and support for employees on their personal financial issues is not only the right thing to do, but also can deliver enhanced performance at work by taking away the money worries that can be a distraction from their daily work. Many working people want financial as well as mental peace of mind; as this significant report highlights.”