HELP YOUR WORKFORCE MANAGE DEBT

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With a pattern of low savings rates and rising debt levels - what can employers do to help employees struggling with their personal finances?


In the UK, average household debt currently stands at £58,948*.  There has also been an increase in average total debt per adult of £898.71* in the year to November 2018.  

It looks like things are forecast to get worse, as according to the Office for Budget Responsibility’s forecast, household debt is predicted to reach £2.258* trillion in Q1 2022.  

There isn’t much better news for savers either, as the average cash ISA rate in November 2018 stood at just 0.88*%, in contrast to the average credit card interest rate which is 18.69*%. 

Debt isn’t just a finance issue as it feeds into all elements of a person’s life. Most people will be embarrassed by their debt problems and will tend to hide it from their employer and colleagues.

You may wrongly assume that it is just people on benefits or low incomes that struggle with debt. Research carried out by Neyber** found that 50% of workers in the UK are borrowing money regularly to make ends meet. 

Debt problems often lead to metal health issues, stress and depression which could have a detrimental affect on your workforce (especially if you do have 50% with money issues)! 

It’s not all doom and gloom though as there are things you, as an employer, can do to help:

Financial education

Financial education is a great way of helping all of your employees with their personal finances.  The way we do it at Lemonade is by segmenting your workforce by life stage, as they have different needs and priorities - find out more.

Promote EAP

Don’t forget to promote your Employee Assistance Programme! It’s there to help counsel your employees with practical advice on issues such as debt that may impact their performance at work.

Workplace loans

If you don’t already, you could look into offering workplace loans which allows employees to pay back the loan from their salary.  There are a number of providers offering a ready made solution such as; Neyber, Workplace Finance and Salary Finance for loans as low as 4.9%***. 

This helps simplify monthly budgeting for your employees, with the loan repaid from net salary**** before they receive it. This could prevent employees using payday loans, other high interest borrowing vehicles or act as a means of them repaying high interest debt. 

***On loans between £300-£5,000 over 1-5 years

****Net salary deduction, therefore no income tax or NI saving

Reducing travel expenses

You can help your employees to reduce their travel expenses by offering season ticket loans or cycle to work schemes.  It’s also a good idea to encourage a car sharing scheme - not only is this good for money saving, it is also environmentally friendly!

Retail / eating out discounts

There are many discount card schemes available through employee benefits to save money on eating out and shopping.  Encourage your employees to sign up to these cards so they can reap the rewards.

Promote childcare savings

For many, their childcare bill is almost the same size as their rent or mortgage! Make sure your employees are aware of the tax free childcare scheme from the Government which gives parents £2 for every £8 they put into their childcare account - up to £2,000 per year.  

Review their existing spending

Encourage your employees to complete a budget planner, like this one - Budget Planner.  

You could do a internal campaign to get your employees thinking about little switches they could make that would save them money such as:

  • Utility Bills / insurances - using comparison sites to get the best deal

  • Mortgage rate - when was this last reviewed? Fixed/Variable? Compare the market 

  • Supermarkets - could they save money by switching to Aldi or Lidl? 

Communication 

It’s great to have a good benefits package which includes help and advice for money worries, but if you aren’t telling your employees about it on a regular basis then it isn’t doing its job.  

Make sure you put a communications strategy in place to ensure your employees are engaged with their benefits package.  We have just launched a handy guide to creating your Employee Benefits Communications Strategy.  

* https://themoneycharity.org.uk/money-statistics/

**DNA of financial wellbeing research - Neyber