Richard Sweetman

Richard Sweetman

Senior Consultant

Willis Towers Watson

Jonathan Gardner 

Jonathan Gardner

Senior Economist

Willis Towers Watson

Richard Sweetman and Jonathan Gardner reflect on the results of the Willis Towers Watson 2017/2018 Global Benefits Attitudes Survey. With substantial numbers of employees reporting money worries, employers will have a role to play in supporting workplace financial well-being and health. Not only is it a good thing to do for the individual employee at a personal level, it should have a positive impact on business performance by increasing engagement and improving performance.

Financial well-being in the UK

It is well-known that the UK economy has experienced a long period of stagnation in wage growth which, more recently, has been coupled by rising inflation which hit a five-year high of 3% in the 12 months to October 2017. Workers are facing growing pressure on their money and savings as well as debt levels are rising – recent data from the Bank of England has shown that borrowing through credit cards, overdrafts and car loans has reached levels last seen just prior to the 2008 financial crisis.

More than a quarter of employees believe financial problems are negatively impacting their life, up from a fifth of respondents in 2015.

With household debt rising and incomes seemingly stationary, it is perhaps not surprising that growing numbers of UK workers are feeling the strain financially. To that end, our recent Global Benefits Attitudes Survey found workers are now significantly less satisfied with their financial situation, with satisfaction levels having fallen from 52% to 43% over the last two years. While more than a quarter of employees (26%) believe financial problems are negatively impacting their life, up from a fifth (20%) of respondents in 2015.

A substantial minority of employees lack financial resilience; over a third (35%) live pay check to pay check (where nearly all salary is devoted to expenses and little in the way of savings) and 41% could not meet a short-term expense of £1,600 if the need arose within the next month. Consistent with this, we see 31% borrowing money from family or friends and 15% taking out a payday loan in the two years prior to the survey.

These financial issues also act as an impediment to saving-for-retirement as few individuals will focus on the long-term when their short-term financial needs are pressing. In our data, we see employees only start to focus on saving for retirement as a priority once their other financial concerns are met.

Figure 1. Top financial priorities for employees

GRAPH: Figure 1. Top financial priorities for employees

As these issues become more apparent we are seeing a growing awareness of the links between financial hardship, stress and health issues and how employees’ professional lives are affected. Employers increasingly recognise the impact on employees and the need to take action in combatting such issues. More than two thirds of employers (69%) recently agreed that they should have an active role in helping employees to manage their personal finances.

Figure 2. The employer view

PIE CHART: Figure 2. The employer view - 69% plan to take an active role in encouraging employees to better manage their personal finances

Understanding financial well-being and how it impacts employee performance

The survey divided employee respondents into four separate categories as follows:

  1. Those who are “unworried” about their finances (39%).
  2. Those with “future worries” and are concerned about their ability to retire (30%).
  3. Those with “current worries” and are focussed on their short-term financial needs, but sanguine about retirement (9%).
  4. Those who are “struggling” financially with worries both in the short and long-term (22%).

The survey revealed a lot about sentiment across generations regarding finances; 39% of millennials are struggling or experiencing current financial worries, compared to 28% of generation X and 18% of baby boomers. In part, this is linked to income and wealth as those with higher salaries are much less likely to be struggling financially. However, this is not the complete story as higher earners can still be poor at managing their money or face high expenses. Specifically, amongst those people earning £65,000 or more we see nearly 1-in-5 (18%) are struggling or experiencing current financial worries.

Figure 3. Employees defined according to their financial worries

How do these financial worries affect employee performance? What has emerged from our research is that those with the most pressing money worries are also the most likely to suffer from poor health, to be more stressed, to be absent from work more frequently and to be less engaged with their job.

Of those who were “struggling”, 44% reported high stress levels and 42% described their health as poor. By contrast, of those who were “unworried”, only 6% reported high stress levels and only 17% were in poor health. Amongst the unworried, the average number of days lost to absence was 2.9, compared to double that (5.8 days) amongst those who were struggling financially.

The role of the employer - towards a well-being strategy

Over half of employers are considering implementing financial well-being programmes for their employees within the next three years.

Whilst many employees are struggling financially and looking for help, we are seeing employers are looking to offer meaningful support with the financial wellbeing of their staff. The links between financial hardship, mental health and workplace performance is leading many employers to believe there is a business case for greater involvement in nurturing the financial well-being of their staff.

Over half (56%) of employers are considering implementing financial well-being programmes for their employees within the next three years . A well designed well-being strategy could include a number of benefits and interventions, potentially including:

  • Financial education, communication and seminars.
  • Employer-sponsored pension and broader workplace savings options.
  • Access to debt-management support.
  • Health and well-being benefits.

To be effective, any well-being strategy will need employers to:

  • Understand what their employees’ financial priorities are, as say, debt management support will not be useful if employees are instead looking for additional savings options.
  • Provide tools and support that fit with the way employees make decisions and live their lives day-to-day. Does traditional advice around budgeting fit with today’s modes of e-commerce and contactless payments?
  • Recognise that some employees may be wary of employer involvement in their personal financial affairs. The broader workplace environment will shape what role employers can play, at least initially.

About the survey

For over a decade Willis Towers Watson has surveyed individuals about their health and retirement benefits. This is the third globally consistent survey and includes representative samples of employees at medium and large private sector companies in 22 markets. We surveyed more than 2,800 people in the UK between July and September 2017.