By 2023 a large proportion of UK employers had moved to offer support with one-off tactical initiatives, like hardship funds and employee loans.
But as industry indexes like Wagestream's State of Financial Wellbeing and REBA’s Financial Wellbeing Report highlight, employers are now going a step further, stitching together strategic, comprehensive financial benefits programmes with third-party platforms, which offer employees market-leading workplace savings, fair, flexible credit, personalised education, flexible paydays and much more.
Watch out for workplace savings
One area of support that employers should expect to hear more about is workplace savings.
Research published by the University of Bristol has shown that regular savers are more optimistic, more satisfied with life and sleep better, and on the flip-side, a lack of savings or dipping into savings for everyday expenses has been found to worsen a person’s quality of life.
For employers looking to help, education about saving is often positioned as the solution. There is no denying education is important, but recent research shows that a focus on this is a red herring.
In August, we partnered with behavioural science consultancy CogCo to ask the questions: do higher earners understand the financial lives of lower earners and, when you extrapolate that to the workplace, what are the implications for the policy decisions that higher earners make on behalf of others?
The most striking finding was the existence of an “empathy gap” between high and low earners – specifically, higher earners persistently underestimating the financial savviness of lower earners.
While both groups strongly recognise and agree with the importance of good financial habits, lower earners are failing to execute on the habits they know matter. These findings were particularly stark when it came to the topic of saving.
This epitomises the state of the UK’s savings challenge and what we need to do to tackle it. Providing education about effective financial habits is not the solution where people already know what they should be doing. Everyone – regardless of income – understands the importance of saving and can articulate the appropriate savings behaviours that they should adopt.
However, for lower earners and those who are financially stressed, this knowledge does not translate into action. For example, despite people knowing there are savings accounts with more competitive interest rates on offer, half of UK consumers have never switched savings accounts at all.
One way for employers to get around this apathy and drive action is through auto-enrolment savings schemes.
