On 23rd March 2022, the Chancellor gave his Spring Statement– what does this mean for your employees and what support can you give them?
The main aspects of the statement:
There will be a rise in the NI threshold to £12,570 from July, claiming this would amount to a “tax cut for employees worth over £330 a year”. Under this new measure, everyone earning below £32,000 will be protected from the increase in NI rates (from April, those earning £9,880 and above will pay 1.25p per pound more in NI contributions) and the income tax threshold freeze.
There was no mention of sick pay. While the increase in the NI contribution threshold goes some way to help support working people, nothing was announced about reforming Statutory Sick Pay (SSP). At the moment, as the pandemic continues and infections remain high, some workers are having to make a choice between their health and earning a wage.
5p off fuel tax duty…this goes a little way to offset the hike in fuel prices but is it enough?
Experts are saying that the spring budget announcement is not going far enough to support employees with the current cost of living crisis.
What are the current issues for employers?
With fuel, energy and food bills increasing at their fastest rate for 30 years, the financial squeeze on employees is huge. In addition, due to the ‘great resignation’ we are seeing an increase in employees changing roles to gain higher paid work. In sectors facing skills shortages and fierce competition for talent, this can hamper business growth.
Employers are having to compete with record-high starting salaries and consider increasing pay for employees who are being met with inflated prices.
Not being able to meet employees’ expectations, creates the risk of losing key people and therefore we suggest that organisations look at other engagement approaches to keep staff motivated and satisfied, such as flexible or hybrid working arrangements, enhanced holiday entitlements and dedicated mental health days.
For case for offering Financial Wellbeing support.
Increase in employee retention – If staff feel support and have access to advice to help them to manage their finances, engagement will increase and they will be less likely to look for alternative work.
Supports recruitment – Offering financial wellbeing can be a good way of attracting new recruits. It demonstrates the company’s commitment to helping individuals perform to their ability.
Reduces absence –Money worries can take a significant toll on employees’ wider mental wellbeing, leading to anxiety and even depression, and potentially absence from work. Worrying about money can be a source of ongoing stress that can lead to more serious conditions over time. One of the side-effects of money worries is sleeplessness. According to a 2017 report by the CIPD, 19% of workers said that lost sleep over money worries had affected their ability to concentrate at work.
Increase/maintains productivity – If staff are worrying about money matters or taking time out of their working day to deal with them, this will decrease their productivity. If they are struggling to sleep or are not eating well as a result of financial pressures, this may also mean they are unable to do their best work. Providing financial wellbeing support will help to maintain or hopefully increase productivity.
Here are our key points to financial wellbeing.
Financial wellbeing is not just about reducing debt or helping low-paid employees who are struggling. An effective financial wellbeing strategy will support all employees to get the most from their money and achieve their financial goals.
A good financial wellbeing strategy will blend appropriate products, financial education, guidance and advice, good communication and some “nudging” to guide employees in the right direction.
Potential areas to consider:
✅learning good budgeting
✅advice on how to make pay go further
✅debt management
✅building a financial safety net
✅saving for retirement
✅tax planning
✅pension management
✅offering an employee assistance programme
✅Offering discount retail voucher schemes, childcare support and other benefits
✅Encouraging employees to shop around for home insurance, utility providers and other home expenses. Loyalty does not pay when it comes to renewing services
✅Encourage employees to stop unnecessary payments i.e., magazine subscriptions
✅Introduce a salary sacrifice scheme i.e., cycle-to-work, low-emission car purchase schemes and pension contributions can all still make use of salary sacrifice to reduce employees’ tax and national insurance contributions.
If you already offer services or benefits, it’s a good idea to approach existing benefits providers to check that the company is benefitting from everything available under its current packages, including free extra services such as access to apps.
Many financial advisors such as Lester Brunt will come to your workplace to give advice to your employees. Fees depend on the size of the organisation.
Link with physical Wellbeing.
Consider linking with a wellbeing company such as Bridge Health & Wellbeing – they offer workplace wellbeing packages to companies that focus on keeping staff more productive and treating work related musculoskeletal conditions and injuries, keeping staff in work or to help them to return to work quicker. They also offer exercise classes such as Pilates, yoga and zoom. Giving employees a discounted or fully funded membership on gyms/classes means that they can use their money for other vital things.
One step further…
- Pay the Living Wage Foundation living wage – Workers must be paid at least the appropriate rate of the national minimum wage, which for workers aged 25 or over is referred to as the national living wage. However, there is another “living wage”. The living wage is the hourly rate of pay calculated independently to be the minimum that a worker needs to earn to cover the basic costs of living. More than 5,000 UK organisations are accredited living wage employers, with 75% saying that it has improved retention and recruitment for their business.
- Communicate well – A financial wellbeing strategy will be of benefit to employees but only if they know about it and understand its value.
- Involve your employees – Ask your employees what support they need. Consider having workplace “champions” to help communicate what is on offer.
- Be inclusive – Financial products can be complex; it is essential that communications about them can be easily understood by all of the workforce and that employees can see the relevance of the products to them.
- Build a buzz – Run a financial wellbeing roadshow, have focus sessions, take into account, part-time, shift and remote workers. Anyone who will not be able to benefit from a physical event will need to be included in other ways.
- Consider the long term – this shouldn’t be a one-off initiative. Some aspects of improved financial wellbeing, such as pensions, take a lifetime to develop. Other aspects, such as saving and budgeting, require employees to form habits over time. To support this, any communication plan needs to take a long-term outlook, to ensure that employees are regularly reminded to engage with their finances and persevere with new habits that they are developing.
- Regular reminders – for example, remind people on a yearly basis that they can increase their pension contributions.
- Be sensitive – Financial difficulties are a major source of worry to many employees. Problems can be particularly acute around Christmas – for some, the festive season can result in feelings of inadequacy and further embed debt worries.
- Choose appropriate communication methods. There are many different ways of communicating and driving engagement from paper booklets, videos, smartphone apps, internal internet updates, and different elements of the financial wellbeing initiative are likely to require different approaches.
We hope that you have found this guide useful, please contact us with any questions or for further support.