Financial wellbeing & pre-emptive education01.10.19
Chief Innovation Officer
A 2019 report by StepChange called ‘Life Happens’ found that a significant life change, (like separation from a partner, falling ill or becoming a carer) most heavily affects those at highest risk of debt. Typically, we’re talking about parents, renters and low-earners. Almost half (45%) of people in the UK say they - or someone in their household - experienced a life event within the last two years, and StepChange found that these people were three times more likely to be in problem debt. So, how can employers help minimise the risk of debt arising, and improve the financial resilience of their employees?
Protecting your employees’ future
Well, these life events are somewhat predictable – we know our employees will likely move house or change working patterns during their time with us. We also (often) know when employees are struggling with personal problems such as relationships or family illness. While employers cannot perfectly predict these issues arising, they can be proactive in preparing for the eventuality that these situations will occur, and safeguard against a decline in employee financial wellbeing as a result.
More than a third of employers believe expanding their benefit offering will help with employee wellbeing. However, less than a quarter of employers encourage employees to consider their benefits in a financial planning context. In addition, health insurances are still rarely integrated into a wellbeing strategy, according to employers. Even when health insurance is included in wellbeing programmes, there is a significant education gap. Research reveals that employees are still incredibly confused by health and financial benefits, with many employees not understanding their benefits, and only half actually understanding their benefit materials.
When designing a workplace wellbeing strategy, it’s important that employers help their staff build resilience against the inevitable knocks in life. Part of this is helping to educate employees about the importance of insuring themselves…
Benefits worth having
According to government reports, as many as 1 million employees per year take sick leave for a month or more. What’s more, employees are seeking mental health support more than ever. Data from Unum shows a massive £42 million was paid to group income protection claimants who were suffering with mental health conditions last year. With as many as 1 in 3 UK employees being diagnosed with a mental health condition in their lifetime, these kind of protection benefits have fast become a must-have. And yet, only around 18% of UK staff have income protection or critical illness insurance. This exposure to an unexpected life event is leaving millions of employees at risk of falling into a worse financial position.
The most surprising thing about these protection benefits is the rate at which they consistently pay out; making them an incredibly valuable benefit. Last year, the Association of British Insurers reported that protection insurers had paid out a record-breaking £5 billion in claims. Broken down, a huge £13.9m per day was paid in income protection, life assurance and critical illness – this means that in the UK, 97.8% of protection insurance claims are paid.
Despite this, insurance benefits such as income protection remain incredibly difficult to market – especially to younger employees who may perceive these benefits as expensive and only of use to older people.
Changing the message
If we change how we talk about insurance and protection benefits, we can boost engagement. Historically, income protection has been seen as a benefit needed for older employees with a family or a mortgage. However, research shows that 1 in 10 of us are likely to take off more than 6 months from work due to ill health throughout our working life, and experts say that young staff are at a greater risk of taking time off. With just 3% of young renters having income protection insurance and 3 in 5 having no home contents insurance, some employees are incredibly exposed to debt. It’s even reported that 3 out of 4 employees worry about the cost of cancer and how their families would cope with loss of income if they had to give up work.
Employers can illustrate to employees the high cost of not being covered by sharing real stories of the costs of falling ill. For example, Macmillan’s latest research shows that a cancer diagnosis can, on average, cost someone £570 a month. As well as a reduction in income, those with cancer can expect to start paying for regular travel to and from hospital, increase in bills such as heating, additional over the counter medicine costs, replacement clothing and home modifications. In the UK, Cancer Research say that 1 in 2 people will be diagnosed with cancer in their lifetime – this kind of vulnerability to financial struggle is a real concern employees should be aware of.
Education, education, education
If employers want to make a real difference to their people’s financial wellbeing, and help prevent future financial struggles, education must start early in our careers. By signposting education content and financial wellbeing services early on – even as soon as an employee’s recruitment – we are giving our people every opportunity to take control of their own finances and make better decisions under their own authority. We know education is key to healthier finances – resulting in improved productivity, motivation and overall wellbeing – all that’s left is for employers to make the change.
Gethin is an award-winning psychologist who has been helping some of the world’s largest organisations to improve their employee experience and wellbeing for two decades. The last 10 years have been spent working as part of the senior leadership team here at Benefex where Gethin leads our thought leadership in the market.
As a frequent writer and speaker on employee experience and employee wellbeing, Gethin has been featured in Forbes, The Guardian, The Huffington Post and The Financial Times as well as all major HR, Reward and Pensions publications. Gethin has been listed as one of the world’s top 101 Global Employee Experience Influencers for the last two years running, is listed on the Employee Engagement Powerlist, is one of LinkedIn’s top global contributors and an Inspiring Leader 2021. Gethin is also a regular keynote speaker, Chair of the UK Government-backed Engage for Success Wellbeing Thought Action Group, a Key Stakeholder in UK Government Transport Employee Wellbeing KPI’s and a Fellow at the RSA.
In 2018, Gethin published his first book - the HR bestseller ‘A World of Good: Lessons From Around the World in Improving the Employee Experience’, which has gone on to inspire HR and Reward teams at some of the world’s best known brands. In 2022, Gethin co-authored his second book ‘Das Menschliche Büro - The Human(e) Office’ a collaboration between leading academics and workplace professionals from across Europe.