Category: HR Challenges

Breaking the Debt Trap through Financial Education

The United Kingdom is reeling under a personal debt crisis, unprecedented in its scale. There are a disturbing number of statistics on the financial fragility of UK household finances. There clearly is a pressing need to address this financial vulnerability. There seems to be a weakness in money management skills, including anticipating bills and budgeting among people in general.

After the Christmas excesses, millions have come face to face with the cost of the celebrations as the credit card bills came through the letterbox on Blue Monday, traditionally dubbed the most depressing day of the year. According to Professor John Jerrim, of the UCL Institute of Education, “There’s a direct link between basic financial literacy and being able to make big financial decisions, such as knowing the implications of getting a mortgage with a certain interest rate.”

Data compiled through the Programme for International Assessment of Adult Competencies (PIAAC) in 2011, show that England and Northern Ireland are facing a “crisis” in financial literacy skills, as research reveals that one in three people cannot work out the correct change from a shopping trip. This lack of financial literacy in the UK has been found to be correlated with higher debt burdens, incurring greater fees, loan defaults and loan delinquency.

Financial education programmes aiming at money management skills could be effective in reducing debt. Personal financial management software, behavioural finance literature as well as financial education need to be employed to encourage budgeting and saving.

According to a report commissioned for Talk Money Week, 77% of UK citizens said they did not or could not recall receiving any financial education at school. Most payday borrowers cannot accurately recall Annual Percentage Rates (APRs) despite having the ability to report finance charges, suggesting that most borrowers consider charges rather than APRs in making borrowing decisions.

A major part of financial education includes understanding the value of money. It is vital that individuals realise that financial education offers incredible value for them as it has the potential to treat the underlying cause of under-saving and high reliance on debt. Here, two things need to be called out, one, some of the responsibility for ensuring employees have received or have access to basic financial education should lie with the employers – this is because it is they who end up bearing the impact of their employees money concerns in the form of loss of productivity and lack of engagement in the workplace. One underused resource for financial support is Credit Unions, which may just have the answers. The second thing that needs to be acknowledged is that this education needs to be more than just a checkbox exercise. Just providing access to material or videos in the form of education may not work for everyone. People learn differently and have different triggers, this education needs to be delivered in a way that it is personalised, relevant and timely in order to maximise engagement and uptake, and therefore, the resultant benefit.

Credit Unions are important players in national financial literacy strategies. They have a core operating principle of financial education, but this is primarily restricted to low-commitment activities with marginal impact. What is required is a well-structured programme, that could focus on money management skills and constitute an effective financial education strategy for those in distress. The FairQuid Wellbeing Platform is structured in a way that is based on personas and triggers,and it delivers personalised and relevant content to each user when they would respond to it. Technology is used to personalise the experience and hence, drive engagement with the content. It can help people learn healthy financial habits while supporting them in times of need.

How to Address the Question of Financial Security for Gig Economy Workers?

The concept of work today is changing. One key trend making waves is the concept of freelance or contract-based work, also known as the gig economy. A departure from the full-time employment, a gig is a temporary work engagement where the worker is paid only for that specific job.

According to the McKinsey Global Institute [1], there are 5 million people currently working in the gig economy in the UK, which is around 15.6% of the total full- and part-time workforce in the UK (32 million). The flexibility that this trend offers the individuals is what makes it so attractive, especially for those who do not want to, or for some reason cannot, work full time; while the businesses find the gig-based system to be more cost-effective and efficient.

Many of the current work profiles can easily be transformed into gig economy contracts. Some of them are obvious, such as couriers, delivery staff, drivers and manual labour; while others may not be as obvious, such as part-time teachers and healthcare providers. According to the Office of National Statistics[2], most of UK’s gig workers are in London. Around 27% of the capital’s workforce is employed on a gig basis (17% are self-employed and just 13% are employees).

While it is a given that people who are working as independent contractors benefit from the ability to quote their price on the project of their choice, there are some obvious pitfalls as well. One of the biggest one is, of course, the lack of job security and continuity. Also, as gig workers are not recognized as employees, they are not eligible for workers’ rights and benefits such as sick leave, holiday pay, maternity leave, etc. In fact, they are not even assured a minimum wage.

This is a disturbing development, taking into the account the fact that the UK is currently facing a consumer debt crisis. The average UK family now owes £15,385 in unsecured debt, including credit cards, loans and overdrafts. According to the Trades Union Congress, the total amount owed rose to £428 billion in the Q3 2018. That means each household owed £886 more than a year earlier. [3]

Another disturbing sub-trend developing in relation to the gig economy is regulatory in nature. As gig workers are not recognized as employees, they are, therefore, cut off from the ‘benefits’ that go hand-in-hand with full-time employment. As a result, many gig companies are facing legal issues. Addison Lee, a car and courier business, has come under a lot of scrutiny in the UK for claiming that their drivers are not employees but self-employed and are not entitled for employee benefits. Deliveroo, another gig company, faced riders’ strikes after the company announced plans to replace their hourly rate with a payment per delivery[4].

Such examples clearly point to the fact that financial security is top of mind for individuals.
Recognising this need, companies such as Addison Lee and Deliveroo have now started to evaluate alternatives that allow them to improve engagement with their workers as well as benefits that go with the gig they signed on for. For example, Deliveroo is set to equip its 35,000 riders with free accident insurance worth £10 million. The flip side to this move is that the company risks labeling its self-employed workers as staff. However, if regulations allowed for benefits to gig workers, then many companies would certainly be exploring additional options. According to Deliveroo’s CEO and founder Will Shu, “We would like to go further, but are currently constrained by the law.”

One thought that needs further deliberation is that for a gig worker access to mainstream financial products is limited considerably, since old credit models don’t treat a gig worker in the same light as a full-time employee. Even if they have a good history of earning and stable income, their options get reduced and costs are driven up if they have to access funds in need. Additionally, the variability in income makes it difficult to stick to regular savings as income may be flexible but expenses are not.

In such an ecosystem, it is interesting to note that the number of gig workers in the UK economy are only set to grow. As per numbers shared by RSA Insurance [5], 18% of the workers in the UK would be open to gig work – that is roughly 7.9 million people prepared to make this leap. With the number of people moving from fixed income to variable income career options, there is a pressing need for a solution to address their financial needs and at the same time empower them to get into the habit of saving for a rainy day.

The FairQuid Wellness Platform may just have the answers. Having partnered with Credit Unions, FairQuid offers people an alternative access for emergency funds as well as a flexible way to save regularly – using the work history and performance as current and forward-looking credit risk indicators, rather than conventional financial parameters. In the context of the gig economy, FairQuid would tie up with gig companies to offer their self-employed contractors this innovative financial solution. They would receive financial and educational tools to take better finance-related decisions with regards to initiating savings and have ethical access to funds, if needed.

On Demand platforms will benefit by not only generating immense goodwill among the contract workers, but also proactively preventing financial security-based mental health issues and boosting engagement levels. They will also be benefitted by increasing stickiness of their platforms as they would have converted individual’s platform data into a credit currency for them.

[1] https://www.thesun.co.uk/money/3985964/gig-economy-pimlico-plumbers-uber-amazon/
[2] https://www.premierline.co.uk/knowledge-centre/the-gig-economy.html
[3] https://www.express.co.uk/news/uk/1068877/debt-crisis-uk-families-credit-cards-overdrafts
[4] https://www.thesun.co.uk/money/3985964/gig-economy-pimlico-plumbers-uber-amazon/
[5] http://www.smeweb.com/2018/05/31/gig-economy-changing-uk-labour-market/

How to Save as you Borrow (as an Employee)

2 min read

Saving money isn’t easy. Especially when you’re juggling debts. Putting money aside for a rainy day isn’t something we, as a nation, are very good at anymore.

Since the recession, banks have encouraged consumers to borrow money. Interest rates are low, so why not treat yourself? Get a new sofa. A new car. Go to Spain. Buy that shiny gadget you’ve had your eye on for a while. Treat yourself. Treat the kids. Have fun! You only live once (YOLO).

Unfortunately, this mindset has, for millions of families, created an unhealthy relationship with money. For the first time in 30 years, UK households collectively spent more than they earned in 2017. Since over 16 million people have less than £100 in savings, how does one support all this spending? In one word: Debt

Low savings and debt: Impact on employees

Low levels of savings alongside debt is a toxic combination. It causes stress. A lot of it. With sleepless nights, one in four employees has struggled to perform at work due to money worries.

Ultimately, it’s felt at the workplace. Anxiety and stress can cause accidents and absenteeism. With struggling staff, it can also drag down productivity and most importantly – the overall well-being of your people.

Many think that financial stress is something of a taboo, especially at work. Team members aren’t likely to raise these issues with a manager or HR. This puts employers in an unfortunate position that they’re negatively impacted by problems they aren’t aware of and seemingly can’t do much to control or improve.

So what can you do, as an employer, to help your employees where they need it most?

Encouraging positive change

So we already know it’s tough to save when you’re steeped in debt. Without the safety net of savings, anything can go wrong, putting employees at risk.

When you’re looking for credit, there are many barriers to affordable access to credit. For one, your credit score history can leave you with nowhere else to turn but high-interest rate options such as credit cards, overdraft accounts and payday lenders.

It’s not all doom and gloom, though. We’ve got a solution! We enable loyalty and performance with the employer to be used as a credit currency.

What does that mean? Instead of historical credit scores, we measure the current length of service and performance to assess the eligibility of a loan. Using these innovative metrics, means we solve the problem of access to credit because our approval rates get up to 97%. There’s no point providing an employee benefit if it can’t benefit all your employees, right?

Couple this with an attached savings component which nudges employees to, ‘Save as you Borrow’, and voilà – we are changing behaviour for the future! And we really are. Most employees continue saving long after they have paid off their loan.

So how do we pull this off? Our partners are not-for-profit, member-owned, financial cooperatives. In short, Credit Unions. We connect employees to these ethical organisations through our platform, giving them access to the fair credit they deserve.

Partnering with responsible employers that want to offer a benefit that really matters, we are on a mission to bring fair finance to all. We want to put people back on track to saving, becoming debt-free, and being part of the co-operative financial community – one employee at a time!

Get in touch! Let’s be part of the movement to improve employee’s lives together!

Supporting Credit Unions through the #WorkNotWorry Campaign

Read time: 2 mins

Not enough savings and too much debt is a painfully stressful reality for millions of people across the UK. Credit unions are at the forefront of driving change and we, at FairQuid, are right beside them providing access to fair credit.

ABCUL (Association of British Credit Unions Limited) has launched the #WorkNotWorry campaign, with the aim to get more people to start saving and benefiting from credit unions. If you haven’t heard of them, credit unions are not-for-profit, member-owned financial co-operatives. Members (anyone who has an account with them), enjoy the same saving deposit scheme protections and services as high street banks but with better benefits. They can earn dividends, so when the credit union and local community does well, so do the members.

What causes worry at work?

Research shows that 46% of employees are worried about money, and 59% of those feel they’re not performing at their bestbecause of this stress. It doesn’t help that 1 in 4 are not getting enough sleep, which is understandable when 16 million adults have less than £100 in savings, according to the Money Advice Service (MAS).

Media stories about record levels of debt and people with not enough savings always sound like these are problems that happen in other companies, to other people. However, as we know from working with companies across the country, these problems have an impact on more staff than companies realise.

It’s a scary reality that millions of people, including those with families to support, are carrying more debt than they can afford and living one pay cheque to the next. Together with the employer, we can change this.

What can employers do?

When employees are caught in a vicious cycle of perpetual debt they need practical help. As money worries persist, team members can become less productive, take time off sick, make mistakes, and could start looking for another job.

In partnership with credit unions, we offer a practical solution through our innovative wellbeing platform. At FairQuid, both our employee financial wellbeing products have attached savings components whether you Save as you Borrow or Save with a Purpose. We have found that when nudged to save, the majority keep saving after the debt has been fully paid, changing behaviour for the future and working towards becoming debt-free. Combined loan and saving payments come direct from net wages, making it easier for people to budget without having to find spare cash for savings.

Most financial institutions only use credit scores to assess eligibility for credit. However, we know that doesn’t give everyone the fairest chance at accessing finance when they need it most. With our partner credit unions, we reward employee loyalty by assessing eligibility on the length of service and performance. This way, we give employees a way out of debt and into savings, changing long-term attitudes to money, and significantly reducing stress at work.

We believe in the power of the community to help each other and therefore are proud to support credit unions to increase their impact and raise awareness through the #WorkNotWorry campaign.

Want to support your team where they need it most? Join the FairQuid movement and help your staff to #WorkNotWorry! Contact us today.

Improve Your Employee Financial Wellbeing With Practical Solutions

Once known as a nation of savers, UK consumers are now more likely to use credit than savings for emergencies and other purchases such as holidays.

Savings are at the lowest levels since 1963. Over a decade of low-interest rates since the recession, have made it easier to borrow and reduced the benefits of keeping money in savings accounts.

Since the Office for National Statistics (ONS) started collecting data on borrowing in 1987, UK households became net borrowers in 2017. A worrying trend. It means the amount people borrow now exceeds the amount they’re depositing in bank accounts, pushing savings ratios to record lows, currently at 4.9% of their disposable income.

We’ve seen this before

High levels of debt, governments, banks and property companies encouraging people to buy houses, low levels of savings, and some economic uncertainty. It sounds too familiar, too much like the opening scenes of the world economic meltdown.

Brexit doesn’t help matters either, throwing a whole other set of uncertainties into the mix.

A debt charity, StepChange spokeswoman, said to the BBC “If we could shift that balance a bit, especially for lower income households, we could improve the financial wellbeing of many households and prevent many experiencing problem debt.”

An accessible emergency savings fund of £1,000 per household would lift 500,000 out of problem debt. People could use savings when necessary, instead of turning to predatory lenders.

Can and should employers help?

Yes, but that doesn’t necessarily mean you need to lend money to staff or increase wages. Companies can only afford salary increases in-line with their own budgets and revenue forecasts. Lending money comes with huge challenges and implications so isn’t always advisable either.

Financial education, although well-meaning, only goes so far and fails to tackle the real problem: Managing too much debt and not enough savings. Companies rarely get much of an ROI from such programs, and employees don’t feel the benefits.

Offering practical solutions, for a practical problem, is the way forward. FairQuid Employee Wellbeing Solutions are a practical solution that is proving popular amongst employees at companies we are working with. Members of your team can gain access to loans (with automatic, built-in savings accounts) from Credit Unions.

Not only do these services reduce employee financial stress, it means they can start saving straight away.

With debts reducing and savings growing, employee absence, time off due to stress, and turnover, reduces. Be a responsible business and join us to support employees to become debt-free, today.

Catalogue Goods & Appliances – their cost to an Employer?

With interest and unnecessary adds-ons (e.g. insurance), goods purchased from catalogue websites can cost up to three-times as much as the same item on the high-street. And payday loans don’t make for better reading, with interest rates as high as 1,500%.

It sounds like a consumer credit issue and not something linked to an employer one would think. However as progressive employers think of Financial Wellbeing under the holistic umbrella of improved mental health and overall wellbeing of the workforce it highlights key underlying issues that need to be addressed for the workforce.

Lack of Financial Education

We all know and demand financial education to be included in schools but we need to take some action for the workforce that is already out of schools and need it the most. The fact that objectively no one should be using these schemes and still the brands are seeing double/triple digit growth rates tells us that there is a dire need for financial education in the workplace.

Lack of Access to Essential Items

Access and cost of credit in this country is denied or exorbitant for people who would benefit from it the most. Pricing based on, backward looking, credit scores means, past haunts hard working folks indefinitely. Low levels of savings and flat wages mean many have to resort to expensive credit like rent to own even for essentials like Fridge or a washer. FairQuid’s Length of service and performance as a credit currency let’s employees present a more current and future view on their creditworthiness, through their employers. This becomes a very critical first step helping hand that many need.

Declining Rate of savings and reliance on expensive credit

The Regulator sees the problem, as Employers we need to also see the direct impact it has on staff productivity and health. We need to ensure that as we think of Financial education we make it actionable and easy for our teams to adopt and stick to good habits. Habits are formed over a period of time and hence programs like payroll savings make it easier for folks to not just opt in but to stick to it till the time it becomes a habit like tying your shoelaces.

Are employee perks contributing to mental health issues?

Employers do their best to make employees’ jobs fulfilling and appropriately compensated for their time and efforts: a decent wage goes without saying, but employers will often offer additional benefits, such as memberships and discounts.

81% of employers offer these perks to support their employees’ health and well-being, suggesting that employers genuinely care about their workforce outside of the office.

But what if these benefits are having an adverse effect?

With a quarter of the UK population suffering from a mental health issue each year, it’s important to consider best practice to not aggravate these problems. In addition to mental health conditions, all of us will be subjected to some mental strain: depression, stress, and anxieties are almost inevitable, particularly in work, relationships (romantic, friends, and family), and money.

The Strain of Money

For most people, income is often a fixed amount – a wage after taxes – and this needs to be stretched to meet a variety of needs. Bills and rent or a mortgage will take up a sizeable chunk, and then there are other necessities such as food, and travel costs, which are likely to vary, as well as unexpected costs.

And this is only when you have yourself to consider: raising a family, with each child estimated to cost £600 a month. When you consider that people are trying to juggle expenses with saving and enjoying the lives they work so hard for, it’s understandable that money can play an important role in mental illness. As part of a survey by Money and Mental Health, 72% of respondents said that their finances suffered because of their mental health issues, and 86% said that their mental health problems were made worse by their financial situation.

Offering Discounts as Benefits

Discounts with various stores and retail brands as part of an employee benefits scheme might, therefore, seem like a sensible option. If employees are going to spend money, discounts will save them money.

However, discounts, sales, and special offers are vendor tactics to increase sales rather than to save the consumer money. These can encourage existing customers to spend more or draw in new customers that haven’t purchased from there before (if an employee receives a discount code, they may feel that they might as well use it). These perceived benefits can trigger negative purchasing behaviour, particularly in those who suffer from mental health issues. For example, splurging can be a symptom of stress, anxiety and other hidden mental health issues.

Online Traps

Online shoppers are particularly vulnerable to over-spending. Internet shopping makes the process much easier: it can be done from the comfort of home, it’s fast, and our card details can be saved so that making a purchase is as quick as clicking Buy Now. Online retailers also offer additional incentives, such as free delivery when ordering over a certain amount, or so much off once the total is high enough, all of which encourages browsers to keep spending.

Mental Health Affecting Spending, and Vice Versa

When a person is feeling low because of mental health issues compounded by the stresses of everyday life, they are more likely to spend erratically, and sometimes in excess of their means.

According to Money and Mental Health, “93% of people with mental health issues spend more when they’re unwell.” The lure of new products can promote a sense of feeling good, euphoria in the purchasing and acquiring of an item that will make them happier; but even if the sale does deliver on its implied promises, these are short-lived – and the cost that has been incurred is much more enduring.

Over 8.8 million people in the UK are currently caught in “serious” debt, with Brits’ total personal debt, including mortgages and loans, having risen to £1.43 trillion. An estimated 50% of those with debts too difficult to manage are also suffering from a mental health issue. It is therefore worth considering whether offering discounts as a benefit is legitimately an advantage, or are in fact only an incentive to spend more, particularly to those already suffering from a mental health issue.

Healthier Alternatives to Discount Benefits

These benefits can be of some use to certain employees, but they may also enable those with mental health issues to spend more than they intended, or more than they can afford to. And although a benefits package is still considered an important aspect of attracting and retaining staff, it’s vital to balance the benefits offered with how best to support your team’s mental health.

Even when discount benefits are used to save money on an intended purchase, employees are unlikely to see any long-term benefits. The few pounds they save will probably remain in their bank account to be spent on something else, and discount benefits can encourage unreasonable spending and even lead to, or exacerbate, debt.

These need to be packaged and provided in conjunction with actionable tools by offering employees a safe, reliable method of putting money aside. Saving with a FairQuid employee wellbeing credit union partner ensures that members can set aside an amount they feel comfortable with every paycheck, and, to resist the temptation to spend it, the money is taken directly from their wage.
An alternative to traditional “big bank” saving is credit unions. These collectives originally grew out of a way of helping everyone in the same community – whether that be those in the same area, same profession, or working in the same company. Approximately 1.7 million people in the UK belong to a credit union.

Whereas traditional banks use your money to create a profit for themselves and their shareholders, credit unions are based upon the mutual benefits for their members. And the fact that credit unions are protected by the FSCS makes them just as secure as banks.

Credit unions repay their members with dividends rather than interest rates, although some larger unions offer an AER (Annual Equivalent Rate). Credit unions working in partnership with FairQuid can save your money before it’s even hit your bank account. By taking the money straight from your wage, you can budget what’s left over knowing that you’ve already put aside your savings before you begin spending. Please click here for more information on an easier, safer way to save.

Best Practice For Financial Wellbeing: Actionable Tools To Help Your Employees

It sounds cynical, but however much your employee loves their job, a big motivating factor in coming to work is the financial stability they get from it.

They exchange forty or so hours of their week for a wage that allows them to rent or mortgage a home, purchase food, drive a car, and have access to other services, including leisure activities.

When there is a risk to their financial stability, staff are unlikely to be motivated, and their efficiency is likely to be affected. Small amounts of stress aren’t necessarily considered a bad thing. Pressure to meet deadlines and targets could propel employees to do their best (as long as it isn’t applied too harshly or maintained for an extended period), and, theoretically, financial incentives such as commission for salespeople are more effective if they are appreciated – or necessary. However, stress, induced by money worries or otherwise, is likely to have a negative effect on an employee’s state of mind whilst working.

Losing sleep over money

Almost half of UK employees are worrying about their financial situation – and 18% are losing sleep over it. Stress prompts the release of adrenaline and cortisol, two hormones which can cause significant harm throughout the body, affecting mood, memory, blood pressure, heart rate, and the immune system.

Employees can hardly be expected to perform at their best under such conditions: 1 in 20 staff have been absent from work an average of 4.2 days a year due to financial stress-induced illness, with 49% of stressed employees taking sick leave compared to 36% of those who aren’t as worried about money.

Alongside the run-up to Christmas, this time of year is probably one of the worst for employees’ stressing about money. It has a negative impact on productivity and can lead to time off sick or some looking for a new employer.

With the news that Carillion, the UK’s second-largest construction company, has gone into liquidation, threatening the jobs of its 20,000 UK workers, it’s evident that our current economic climate poses risks to financial security. Even organisations that are seemingly doing well can do more to prop their employees’ sense of financial well-being. Only you and your senior managers can take steps to ensuring your employees’ jobs are safe – but what about implementing other security nets?

Financial well-being services (that won’t cost a penny)

Many companies offer financial benefit packages – but employees are not always aware of what they can take advantage of. Bonuses are one benefit, but others might include investment opportunities, share schemes, and other ways of profiting from the success of the company.

One tool for promoting well-being at work is to make yourself an employer that is approachable, particularly when it’s a sensitive issue. Employees struggling with money might benefit from an advance on their wages, a loan, or asking for a wage increase; but often, they are embarrassed to broach the subject. Many people also believe that management will be unsympathetic to their concerns, with some even thinking that it could affect their prospects if they ask for more money.

Even if you are unable to help, remember to remain sympathetic, and perhaps point them in the direction of alternatives, such as a FairQuid employee financial well-being savings or debt consolidation solution.

Inflation coupled with the stagnation of wage growth has seen a narrowing of disposable income. The first quarter of 2017 saw disposable income, adjusted by inflation, shrink by 0.4% – the greatest drop in almost three years. As households feel the pinch, they are more likely to rely on credit cards or turn to payday loans to fund their spending. With high interest and missed payment charges, the amount being paid back can quickly add up and be in excess of what was originally borrowed.

Saving for a “rainy day” has always been considered worthwhile: a few pounds every week can soon grow into a fund that can be dipped into in emergencies.

However, the fourth quarter of 2016 saw the lowest savings ratio since records began in 1963, falling sharply from 5.3% previously to 3.3%. The ratio, which represents how much of a household’s disposable income is set aside for saving, increased in 2017 back to 5.5% and standing at 5.2% in the latest reported quarter of Q3 2017 (see chart below). However, it is still falling short of previous years like 2015, which saw highs of 9.7%. It seems that British homes are struggling to set money aside from their disposable income.

A sensible, proactive solution

A FairQuid savings account, with partner Credit Unions, is designed for your employees. Rather than an employee taking money from their disposable income – what is left after bills, food, and rent is paid for – to put into their savings – the money is taken directly from their wage even before they receive it.

Instead of savings being relegated to “whatever’s left over” at the end of the month, it is the first outgoing, so it can never be spent, whether accidentally or on purpose. In fact, since the employee will never hold the total amount (that is, their wage including the savings), they are less likely to miss it.

With one cost already removed from their consideration, employees can budget more effectively with what is left over. And, since they are part of member-owned credit unions, participants can benefit from healthy dividends on their savings – so paying in also pays out.

Creating financial security is about more than creating more disposable income for your employees. Peace of mind contributes to a healthy body, a focussed mindset, and an overall happier outlook.

sources:
Financial Well-being: The last taboo of the workplace? – Barclays
Financial well-being: the employee view – CIPD

Why Employee Financial Benchmarking Could Solve Productivity Problems

Far too many people, over 70 percent of us in the UK, have no meaningful savings. No rainy day fund or cushion to safeguard against the unexpected.

With interest rates on the rise, inflation still increasing, mounting consumer debt and economic uncertainty, far too many of us are in a more perilous financial position than we would care to admit.

Average household debt, not including mortgages is around £13,000 and rising. Around 20 million working adults are struggling financially.

Living month to month has a direct impact on productivity and mental health at work. Financial stresses reduce our concentration, sometimes to the point whereby someone is physically present whilst being mentally checked out.

Stress reduces productivity. Employees may need time off. It’s also potentially dangerous when people are mentally checked out, a health and safety incident waiting to happen.

Employers often want to help. Knowing how to help, without giving out salary increases, loans or leaflets offering financial advice, is more difficult. We provide services that solve these problems.

What can an employer do?

Money is a sensitive topic. Even though, as an employer – or HR professional – you know everyone’s salary, people rarely talk about money at work. Asking employees to divulge personal financial information isn’t a practical option. Some employees will talk about personal finance when they need help, but most won’t.

This information gap is a big part of the problem. Thankfully, FairQuid has created a solution that goes a long way to solving it without breaching confidentiality or needing to ask for financial details from staff.
Get a financial health check for your team.

Using postcode data and national financial statistical information, our data scientists can create a customised report that will give you a statistical average for your employee financial personas.

With this information, we can create tailored financial wellbeing solutions that won’t cost you a penny.

Request YOUR free Employee Financial Wellbeing Report Today. Know more here…

The Bank of England Interest Rate Rise: What this Means For Your Staff?

The Bank of England announced that it was raising its base interest rate for the first time in a decade, from the record low 0.25% in August 2016 to November 2017’s 0.5%. How will the rising base rate affect your staff?

Higher Mortgage Payments

Approximately half of mortgage-paying homeowners are going to have a little less disposable income each month.

Out of 8.1 million mortgaged households, the BBC identifies 3.7 million (46%) as having a tracker or standard variable rates, both of which are influenced by the Bank of England’s hike in the base rate.

Although SRV’s may follow base rate trends (increasing a little as the base rate increases and vice versa), they do not follow it exactly. Tracker rates, however, directly correlate with the Bank of England’s rate, and so those with a tracker rate mortgage can expect a 0.25% increase in their payments.

According to UK Finance, the average outstanding balance on a UK mortgage is £89,000, meaning a tracker-based increase of about £12 a month. However, many homeowners are preparing to lock-in fixed rates, with predictions of another two increases coming over the next three years, bringing the base rate up to 1%.

More Savings … Right?

It makes sense that a higher Bank of England base rate would automatically equate to a greater return on savings accounts and ISAs. Well, not necessarily. Newcastle building society has said it will pass on the 0.25% increase in full to all its savers, whereas for Nationwide users, the “majority” will benefit from “improvements.”

Even if a bank does offer the increased rate, the extra 0.25% on £1,000 (the minimum amount recommended as emergency savings) is £2.50, which is a small incentive for holding money for a year.

Spending, Not Saving

The low-interest rates of the previous years have encouraged debt and inhibited saving. Most people have felt that, what was the point in putting money away for a couple of pounds when it could be being spent in the here and now?

And with bank interest rates low for loans, it seemed there was a glut of spending beyond our means. But now with the higher base rate (and its potential to continue climbing), it’s time to be a little more savvy with our personal finances before they become out of control.

A Different Way to Save

Money worries have a direct impact on productivity, mental health, absence and even a decision to go elsewhere. Employees work for money: to pay their mortgages (with the newly inflated prices) or rent, pay off debt, save, enjoy themselves and treat their families.

Employees stressed out by not having a “financial cushion” to fall back on can become anxious and less productive with their minds on other matters, whether that’s paying off existing debt or saving for emergencies or special occasions. Our Credit Union savings account is a useful tool for employees to put aside as much or as little as they like every month – and at no cost to your business.