5 benefits that support financial wellbeing: insights from our cost-of-living event 

To help employers support their people as they face off to high costs-of-living this year, our Chief Innovation Officer, Gethin Nadin, has run a cost-of-living series spanning events, webinars, and content. We recently hosted our final cost-of-living event for 2023, where we were joined by benefit leaders and financial wellbeing industry experts. 

The theme: How to support employees through the higher costs that come with the winter months and empower them for financial success in 2024.   

Customer speakers Andrea Kilgour, HR Director, EE Colleague Experience at EE and Tim Lobanov, Employee Reward and Performance SME – EMEA and APAC at Alter Domus, joined us to discuss the impact high costs are having on employee’s financial wellbeing and the actionable strategies employers can implement to support their people. Benefexers Lyndsey Shaw, VP of Partnerships, and Laura Noyce, Partnerships Executive, also gave their recommendations on how to shape benefits schemes for 2024.  

As we explore the key takeaways from this event, it’s clear the challenges that employees are facing aren’t isolated to employees’ wallets; they impact all areas of wellbeing and demand a holistic approach to employee support.  

Here are some of the ways attendees and our customers are using benefits to support their people and help them become more financially resilient. 

5 benefits that support employee financial wellbeing 

1. Discounts 

Research reveals that the average UK salary of around £34,000 (Statista), leaves many individuals precariously close to the £30,000 threshold required for a decent standard of life (Joseph Roundtree Foundation). Especially during winter, high inflation means that people are having to reduce food, heating – or both, drastically impacting health outcomes. As a result, consumers are adjusting spending habits, cutting non-essential spending, reducing energy usage, and limiting leisure activities due to the crisis (BRC). 

It’s no surprise then that financial concerns are consistently ranking among the top stressors for people, and with employees forced to stick to tighter budgets, they’re looking for ways to save money and make their pay go further.  

To combat rising costs, attendees agreed that discounts and cashback schemes are a useful way to help employees save on both big purchases and regular shopping. Requiring minimal behaviour change, discount platforms help employees stretch their money further when it’s needed most. As many employees are already searching for discount codes to help them make savings, a discount platform makes these easily accessible. 

One customer shared how presenting the savings their cashback scheme provided in terms of monetary value rather than as a percentage encouraged behaviour change in their employees: 

“As people, we can’t really work out how much to actually spend and what the saving is with percentages, but when you can present it as money, suddenly people are like: wow, I have to do this.” 

With inflation increasing grocery costs, discount schemes can help your employees cut costs on their food shop, which is especially helpful in the lead up to Christmas when employees are spending more than they usually would. With a typical UK household spending £5,000 a year on groceries, the 5% they can save via discounts equates to £250. And big savings can be made on more luxury items too – with one attendee sharing that a member of their team used their discounts scheme to make savings on an engagement ring! 

2. Tech services that help employees save on mortgages and energy bills 

Mortgage interest rates started to increase during 2022 and have been an ongoing concern for many people throughout the cost-of-living crisis. With the majority of fixed-rate mortgages previously below 2%, people who have had to renew this year have faced much higher rates and have been forced to make tough choices on essential expenses, or are no longer able to save (Office for National Statistics). This has been coupled with the ongoing Energy Crisis, which has seen the number of UK households in fuel poverty rise to 6.3 million as of October 2023, up from 4.5 million in 2021.  

Attendees agreed that offering free tools like Dashly and Switchd empowers your employees to save on two of the highest costs they’re currently dealing with and make more informed decisions. 

Dashly evaluates and compares existing mortgage deals with the rest of the market, helping employees to identify better deals and switch providers quickly and easily. Similarly, Switchd can help your employees automatically change to the cheapest energy provider, saving them at least £50 a year. 

“The £800 I saved this year was through the mortgage switching module that we have at Benefex, but the big kicker for me was that they didn’t even change the provider. It was far less paperwork than I imagined, and it was all done online, so it was just a couple of clicks that saved me £800.” 

Gethin Nadin, Chief Innovation Officer, Benefex 

3. Salary sacrifice benefits 

Attendees discussed how salary sacrifice schemes can help employees cut costs and access non-cash benefits like childcare vouchers, cycle-to-work schemes, or additional pension contributions. 

As employees look to optimise costs, purchasing and maintaining a car can be a large expense. Data from RAC shows that a quarter of young drivers aged 17-24 (26%) admit to putting off necessary repairs to their cars to save money, while 28% say they are not servicing their vehicles as frequently as they should. People are compromising on safety to leave more money aside for essentials.  

“These are the things that consumers, who are our employees, are facing right now and it is quite worrying when it does come down to them sacrificing safety. How can we make sure that people aren’t making this type of decision?” 

Lyndsey Shaw, VP of Partnerships 

One solution is car salary sacrifice schemes which can provide employees with cost-effective access to vehicles. This includes tax and insurance advantages, covering maintenance costs, tyres, and breakdown cover – making it a cheaper way to run a car for many people. The option to upgrade to an EV can also help employers algin their benefits strategy with company ESG goals. 

There was also quite a bit of discussion around flexing pension contributions. Allowing people to increase their pension contributions not only boosts employee retirement savings, but results in lower income tax and reduces National Insurance contributions for employees and employers. Pension matching was discussed as a good way to encourage employees to contribute more. However, not all employees are in a position to increase contributions.

Tim Lobanov highlighted that Sidecar savings, which combines an accessible emergency cash pot with normal pension contributions, can provide employees with a safety net for unforeseen expenses. Money can be saved into the cash savings pot until a pre-determined limit is reached, then all pension contributions are redirected back into the pension scheme. Andrea Kilgour also highlighted that “pension breaks” are another way to help employees deal with unexpected costs, by allowing employees to redirect a portion of their salary to cover short-term costs, like fixing a boiler.  

4. Interest-free loans and salary saving schemes 

With 3 million people resorting to borrowing from an illegal loan shark in the last 3 years (Credit-Connect), it’s clear that many of your employees don’t have a financial buffer. Lyndsey Shaw highlighted some Salary Finance data which reveals that two out of three people are rejected for bank loans; this has led to people making riskier financial decisions, such as turning to Buy Now Pay Later schemes, which lack regulation and can lead to people getting into debt they struggle to clear or damaging their credit scores. Attendees agreed that providing access to affordable credit, alongside financial education, is a meaningful way to help employees get their finances under control. 

Interest free loans are growing in popularity, helping employees to consolidate debt, reduce interest rates, and pay off their debt faster. Loans can be internally set up through payroll teams for amounts up to £10,000 a year before HMRC involvement. One attendee highlighted that these kinds of loans are popular among commuters for purchasing public transport tickets in advance, especially in London where travel is costly. However, loans can be used in a number of different ways; for example, they could be used for house and rental deposits, to clear credit card bills or, as another benefit leader suggested, to cover funeral costs. 

Bank account switching was another tactic highlighted as a simple way for employees to make some extra money. Gethin Nadin highlighted that some banks like First Direct were offering people £250 to switch their current account to them. With half of the UK having £100 or less in savings, this meant people could increase their savings by 50%, simply by switching bank accounts, with very little effort required given it can usually be done online or through an app.  

Salary saving schemes are another option employers can provide to help their people develop better savings habits. It allows employees to set up a savings account that they can put money into, directly from their wages via payroll. They have the same access and similar interest rates that they would with a regular savings account, but the fact it’s done via payroll means it’s automated and employees are more likely to keep contributing to it. Several attendees emphasised the importance of creating a savings pot/emergency fund that builds their financial resilience, helps them afford the things that matter most, and ultimately helps them feel more positive about their finances. 

5. Mood-boosting benefits 

The benefits leaders highlighted that the financial stresses employees are facing have impacted their emotional wellbeing – and there’s a clear need for employees to be able to do more of the things they enjoy. Employees have less cash to spend on leisure time than they used to, which is exacerbated by the greater caregiving responsibilities that come with an ageing population, and the high cost of childcare.  

Despite the financial constraints on their disposable income, people still want to continue to live fun and fulfilled lifestyles, and make up for time they lost during the pandemic (Deloitte). Due to this desire to live life to the full, Gethin Nadin predicted that mood-boosting benefits will grow in popularity as we enter the new year. These are the types of experiences that provide people with memories, such as luxury spa days, days out, hotel stays and meals.

Employee benefit schemes should include access to positive experiences that give employees things to look forward to and plan for, while offering employees these experiences through discount schemes and flexible payment options can make them more affordable. 

“People are trying to find ways to continue to live fun and fulfilling lives, just on the cheap. That’s why I think we’ll start to see some more experience-based benefits being used in our benefit schemes.” 

Gethin Nadin, Chief Innovation Officer, Benefex 

Setting your employees up for financial success in 2024 

These five benefits go some way to empowering employees for financial success in 2024 – and alongside the right communication strategy, can help organisations foster a positive culture of financial wellbeing. To learn more about how your benefits toolkit can support your employees amid rising costs and improve their financial wellbeing, download our Cost-of-living Crisis Special Report.