Statistics show real cause for concern about the financial wellbeing of many people in the UK – and while money worries are unlikely to ever disappear completely for many of us, there are steps employers can take to ease the burden.
With 77% of employees saying that they have spent time at work worrying about their finances, businesses must recognise the links between financial concerns and poor mental health. An employee who is distracted by money worries will be less productive, and an employee on sickness absence through stress even less so.
These figures are highlighted in a presentation by Northampton-based Commsave Credit Union, which has been established since 1991 and has 32,000 members nationwide who, together, have saved £106m with £51m currently out on loan.
Not-for-profit, so with no shareholders expecting large pay-outs, credit unions offer working people a way to save for a rainy day, as well as providing lending options at competitive rates of interest that can steer borrowers away from spiralling payday loans.
At the heart of the business is payroll deduction, a means of saving whereby an employee agrees that a set amount, from as little as £10 per month, will be deducted from their wages. It costs the employer nothing to become a partner company of Commsave, but the benefits are wide ranging.
James Richards, Business Development Manager at Commsave, said:
“We are passionate about making a difference to members’ lives. The issue of financial resilience is of long-term concern. It became a priority during the pandemic and we’re still hearing warnings about how the cost of living is rising. Our background gives us a valuable insight into building financial resilience and we know how something as simple as having a different approach to saving and a small nest egg tucked away, or access to loans when they’re required, can make all the difference to members’ wellbeing.”
Figures from The Money Charity and the Money and Pensions Service reveal that:
- Unsecured debt per UK adult was £3,745 in December 2021
- There were 286 individual insolvencies per day on average between November 2021 and January 2022
- 21% of working age adults in the UK have rarely or never saved and a further 22% have less than £100 saved
Commsave pays an annual dividend to savers – projected to be 1.5% for the current financial year – and borrowers pay between 6.2% and 26.8% APR on loans. Savings can be incentivised, with rewards for regular savers.
There are a range of borrowing options, including Orbital Loans, which work on the same basis as an overdraft, with an agreed limit and no interest or charges if it isn’t used. The APR on such a loan is 19.6% compared with closer to 40% imposed by banks and other lenders.
In addition, through its CURight.co.uk website, Commsave offers access to an array of financial resources to help employees make informed choices, including retirement planning tools and means by which members can learn to understand their own financial behaviours.
Commsave is easily accessible on phone, website and mobile app, offering easy withdrawals by Faster Payment when members need them and all credit histories are considered. The 31-strong team at its Northampton headquarters are available via the contact centre, which is open six days a week.
James Richards added:
“The estimated annual cost of sickness absence for UK business is £554 per employee. Stress is the main cause of sickness absence and that often comes from money worries carrying over into the workplace. Employers everywhere are now recognising the links between financial concerns and poor mental health and the impact it has on employees.
“Any employer can help the wellbeing of staff by offering membership of a credit union and the chance to save direct from pay. Research shows that credit unions are effective, particularly at reaching lower income households, who probably need the most help.”
A 2021 survey of nearly 3,000 workers – entitled Getting Workforces Saving – Payroll Schemes with Credit Unions, showed that:
- Payroll deduction is effective in attracting non-savers. 59% of joiners said they had rarely or never saved before and only 14% said they already saved on a regular basis
- Being a member makes employees more likely to save regularly. 66% of members said they saved every month – a figure that rose to 72% among those who had been members for more than 12 months – whilst only 52% of employees not in the scheme said they saved every month
- Being part of a payroll scheme reduces levels of financial anxiety and stress – 74% of recently joined members reported that thinking about money made them anxious – a figure that dropped to 60% after saving for 12 months.
“There is strong evidence that credit unions can ease money worries,” added James. “Our own research shows that 26% of Commsave members said they saved regularly before joining, whereas 71% say they do now. That’s a massive leap and a change in savings habits. The peace of mind from knowing there’s money put aside for when you need it makes all the difference to people’s wellbeing.”