Employee financial wellbeing

Uncertain economic climates can cause numerous risks to the financial wellbeing of the workforce. While more employers recognise that financial wellbeing is more than just paying employees and providing a few benefits, it is still among the least common areas included in HR wellbeing strategies, especially among SMEs.

This guide provides practical advice on how to take action to promote and support employees’ financial wellbeing.

What is financial wellbeing?

Making the most of your money and finances

While there are multiple strands to the concept of financial wellbeing, which are discussed in detail in the CIPD’s Financial wellbeing evidence review, it can be thought of as an employee’s ability to make the most of their money and finances on a day-to-day basis, while also being able to deal with the unexpected, like a bill for a car or household appliance breakdown, and being able to plan and save for the future. The Money and Pensions Service (MaPS) refers to financial wellbeing as feeling secure and in control, alongside being financially resilient, confident and empowered.

A useful framework is produced by MaPS in its UK Strategy for Financial Wellbeing. It suggests financial wellbeing is impacted by an individual’s:

behaviour (for example, managing money, planning ahead, proactively seeking advice)
mindset (for example, financial confidence, spending control, engagement with money, saving orientation, digital engagement, and so on)
abilities (for example, financial numeracy, understanding of financial concepts, knowledge of where to access advice)
connections (for example, access to reputable financial guidance).

Poor financial wellbeing can lead to financial distress – when individuals struggle with their current finances or feel insecure about their financial future - and in-work poverty. As well as being caused by not having enough income to cover expenses, all of the above elements can underpin financial distress.

In-work poverty

In-work poverty occurs when a working person’s income, after housing costs, is less than 60% of the national average, and they don’t earn enough to meet the cost of living (calculated using data from the ONS households below average income statistics). It’s an issue that’s been growing since the mid-1990s, and affects people in different ways.

Driving factors include:

Low income, with pay rises failing to keep up with the rising cost of living. 
Poor job quality and employment practices leading to financial instability, trapping people in low-paid roles.
A lack of genuine, two-sided, flexible working practices that enable people to fit their work around their caring responsibilities or health needs.
Underemployment (where people work insufficient hours to cover their cost of living). 
Financial hardship caused by unforeseen setbacks in personal circumstances, such as relationship breakdown, bereavement or illness.
The ‘poverty premium’, which traps those on lower incomes in a cycle where they pay more for goods and services.

Why is employer action needed?

How can you develop an effective employee financial wellbeing policy?

The five key steps to developing a policy to help your employees

Evidence base

The steps illustrated in Figure 1 are based on a range of evidence from the CIPD evidence review on financial wellbeing, workshops with experts in financial wellbeing and an IES study funded by the MoneyHelper (formerly known as the Money Advice Service) that trialled the original CIPD employee financial wellbeing guidance within two large public sector organisations.

supporting financial wellbeing

1. Build support and set strategic direction

While reward/benefits teams and HR teams are increasingly committed to supporting employee financial wellbeing, greater levels of engagement among the board and senior management level are typically still needed.

Creating a strong business case for support will set the strategic direction for your organisation and cement the understanding and value in supporting employee financial wellbeing among your organisation’s leaders and other key stakeholder groups.

A persuasive business case for senior management to support their employees’ financial wellbeing should:

provide a definition of financial wellbeing that all stakeholders understand
link to any broader health and wellbeing strategy and the business strategy
demonstrate understanding of the current and future priorities of leadership, and state the goals, for example, to improve the mental and physical wellbeing of employees, reduce employees’ reported financial stress levels, and enhance the organisation’s brand and reputation
demonstrate the ethical or corporate social responsibility case for financial wellbeing support and demonstrate how support can reflect organisational values
benchmark your organisation against what competitors are implementing to support their employees’ financial wellbeing
highlight the associated costs of engagement
highlight the well-evidenced risks to the organisation that employee financial distress can bring.

Poor financial wellbeing impacts health in terms of poor psychological wellbeing, higher stress and anxiety levels, and lower levels of good health. There are hefty organisational costs associated with these outcomes in key areas such as productivity, retention, attendance and engagement. These impacts provide a convincing case for a financial wellbeing strategy, especially when financial problems are acute.

In addition, research also shows that UK employees now expect their employers to offer support, with over half (59%) of employees believing it is important that their current employer has a policy in place to support and improve their financial wellbeing, and more than four in five UK employees stating their employer should now focus as much on financial wellbeing as on mental and physical wellbeing.

2. Assess and diagnose employee needs

While progress has been made in recent years on taking action to support financial wellbeing, there has been less focus on assessing needs and then evaluating effectiveness. Assessing employee needs identifies which employee groups are in most need of support or are most at risk. Rather than making assumptions, it is vital to engage with your employees and proactively identify issues that may affect different employees.

How can I identify an employee who is struggling financially?

Changes in employee behaviours, such as higher absence, lower productivity, presenteeism, lower-quality work, changes in mood, more distraction or less focus and attention to detail, increased overtime working, or delayed retirement plans may all be indicators of financial difficulties. You should ensure HR and people managers know how to spot the physical, psychological and behavioural signs of poor mental health. Normalise conversations about money in the workplace so employees to feel more comfortable about raising their concerns.

Consider the characteristics of your workforce

Poor financial wellbeing can be difficult to identify, and all employees can experience it, not only low-paid, junior or lower-skilled employees. CIPD roundtables held to inform the 2022 Reward management survey cited examples of senior employees getting into financial difficulties due to life events such as illness, bereavement, or divorce/separation. In addition, the risks vary depending on sector, hourly pay and hours worked, geography, age, gender, ethnicity, and disability. Some of the most vulnerable to in-work poverty are:

those not working full-time
single-parent families
people living in rented accommodation
families who have a member with a disability
families with three or more children or households headed by someone from an ethnic minority group.

Therefore, there can't be a one-size-fits-all approach to supporting employee financial wellbeing, as certain employee groups and people at different life stages may benefit from different types of support.

Before any support interventions are rolled out, you should determine your workforce’s specific support needs, based on information and data rather than assumptions.

Consider the characteristics of your workforce and split your employees into groups to better understand their likely financial challenges. Be mindful of any future workforce demographics in any assessment of need, especially if your organisation is embarking on change.

While not all employees will face the same challenges, it is a helpful starting point. Useful segmentation could include:

people starting their first job or apprenticeship, whose challenges could include their ability to understand and effectively use personal finance skills, substantial student loans or credit card debt, limited affordable housing and navigating future financial goals
people dealing with increasing day-to-day financial pressures while balancing the demands and costs of family life, with the need to save more to buy a house or have enough for retirement
people needing to maximise their retirement fund, potentially with responsibilities for older people, or developing ill health themselves
socio-demographic factors: some smaller employers may have knowledge of the circumstances of their employees that may place them in higher-risk categories for poor financial wellbeing – for example, lone parents, carers and social housing tenants.

Collate relevant information

A significant challenge to effectively supporting employee financial wellbeing is having enough information about employees’ financial circumstances to understand their needs.

This lack of data may be partly due to the stigma that remains surrounding money issues and reluctance to disclose information about personal finances (although these reservations appear to be lessening). However, research by the CIPD found that only 20% of UK organisations actually ask their employees about their financial wellbeing at least once a year. In addition, only 10% of employees state that their employer has asked them if they would like support with their financial wellbeing.

A bespoke anonymised employee survey is generally the best tool to determine employees’ financial wellbeing needs and help to identify particular issues that are causing financial distress. See an example of this approach in our NHS West London case study.

If not enough data is available and a survey isn’t an option, you may be able to use existing sources of employee information to gain insights (ensuring GDPR requirements are met), for example:

A simple analysis of your workforce demographic (for example, age, gender, income levels, culture and location) may help to inform the potential nature of any financial worries.
Publicly available sectoral research may provide relevant industry data.
Looking at data in your HR system (data on age, salary level, employment status, bonus payouts, use of maternity/paternity/adoption leave) may provide clues for offering timely support to employees.
The outcomes of equal pay audits, gender or pensions gap analyses may highlight any disadvantaged groups.
Absence (related to stress or anxiety) data and/or disciplinary case data (related to performance issues, lateness, or even theft/fraud) may indicate poor financial wellbeing or in-work poverty.
Your payroll department may be able to share information about the nature of employee queries they receive.
Your employee assistance programme (EAP) provider and existing providers of any financial benefits may be able to provide insights linked to the take-up of relevant support; for example, a low take-up of benefits such as pensions and saving schemes may indicate low levels of financial understanding or inadequate pay levels, and any increase in the take-up of pay advances or hardship loans may indicate financial distress.
Managers may be able to offer anonymised insights into their experiences with employees related to money issues; however, to preserve the environment of trust, ensure no personal information is shared.
Similarly, trade unions may have data on the financial wellbeing of their members.
Existing employee attitude or engagement surveys may also provide some clues about the current state of employee financial wellbeing in areas such as current levels of satisfaction, work-related stress, views on pay and benefits, and quality of management.

You could also set up focus groups to identify useful services and engage with employee representatives/networks.

Bespoke employee surveys

It is important to ensure employees understand why an employee survey is being conducted and to reiterate that responses will be anonymous and treated confidentially. Collaborating with your internal communications team could help to simplify the messaging. Having a champion at a senior level within the organisation may encourage participation. A summary of the findings should be shared with employees, alongside a commitment to help address any needs identified. These actions will help to foster trust and engagement in the process and create dialogue between managers and employees, opening up the culture to these types of discussions.

Collecting baseline data before implementing any interventions also enables their impact to be evaluated (Stage 5) and will help determine the return on investment of initiatives.

Map existing support

In addition to the assessment of employee need, you should assess what is already in place within your workplace to support financial wellbeing. This will help to evaluate the effectiveness of any existing actions, and identify gaps in support, for which there may be employee demand, and areas for improvement. Beyond any existing financial wellbeing initiatives, you may want to include your current rewards and benefits policies in the analysis.

Key considerations to help you assess your need for financial wellbeing support

Current provision

What financial wellbeing initiatives do we currently offer employees? For example, pre-retirement and financial literacy classes, discount schemes, payroll savings schemes, debt support and mental health support.
How well do we communicate these so that the benefits are understood by our different employee groups?
What elements of the reward package offer the best value for money, and which elements are delivering less value?
Is there enough choice and flexibility for staff to tailor their reward package to suit their own personal circumstances and financial goals?
Do we have open communication channels with employees at every level of the organisation to support our wellbeing message?
Where would employees typically turn internally to look for help if they are in financial difficulty?

Existing data

How many requests are we receiving for emergency loans, or earned wage access?
What feedback do we have from our EAP provider regarding frequency/volume of money queries and problems?
What are our levels of absenteeism/presenteeism and how do these vary across the main employee groups and levels?

Potential gaps

Do we know what our employees think about the current reward package?
Do our employees think that we are supporting their financial wellbeing? And how well? How does this vary between different categories of employees; for example, younger compared with older workers?
What do our external stakeholders – investors, customers – expect us to deliver in this area?
What level of financial knowledge do our employees have?
How committed are our employees at present and how do engagement levels vary across the main employee groups and levels?

3. Actions and design

The actions you can take to improve your employees’ financial wellbeing are highly varied and will depend on numerous factors, including:

your organisation’s size and sector
the profile and needs of your workforce
the level of priority and resources available
your organisation’s existing approach to health and wellbeing.

It is possible that the scale of the challenge identified by your assessment of need will be significant, but it is important to note that, rather than implementing whole-workforce interventions, action can be taken to address the specific needs of a particular employee group. For example, your lowest-paid employees may be a key area for focus. It may not be possible to implement the most obvious solutions to help lowest-paid workers, such as pay rises or one-off cost-of-living bonuses. However, provision of a fair and liveable wage should be a key ambition. You should help employees determine if they are eligible for any additional government support and should ensure that any additional financial benefits offered do not negatively impact anyone claiming such support.

Other things you can do are:

signpost employees to financial education sources and alert them to online financial scams
consider offering benefits that help to stretch pay packets, such as travel season ticket loans, discount shopping vouchers, flexible working opportunities that could reduce commuting costs or help with childcare
provide occupational sick pay
offer crisis loans to help cope with unexpected financial shocks
help with rental deposits.

Employees should also understand how they can progress within the organisation to increase their earnings potential.

Although not all support needs to cost money, you should confirm the available budget and resources for your financial wellbeing offering ahead of designing your approach, and consider what can be effectively delivered internally and where external providers could be used. You could also trial some interventions ahead of a full rollout and almost certainly model and cost their operation; for example, how many people are likely to use a new service you introduce, how much will that cost, and what will be the value of the resulting benefits?

Table 2 provides some suggestions for actions. These are typically lower-cost and less resource-intensive interventions.

Whatever your ambitions, be realistic and targeted, using your data to ensure you are creating a financial wellbeing strategy that accurately reflects the needs of your workforce to maximise its impact.

Table 1: Suggested actions to support employee financial wellbeing for organisations just starting out on the journey

Type of action	Examples of action
Creation of a financial wellbeing policy	Begin to build a cohesive financial wellbeing policy that brings together all your practices in this area. Consider how your efforts on financial wellbeing align with your wider health and wellbeing, and business strategies.
Paying a fair wage	Review basic compliance with pay policy; for example, changes to the National Minimum Wage and National Living Wage. Consider becoming an accredited Living Wage employer, which research shows has business benefits despite increased payroll; for example, improved business reputation, employee motivation and retention. This ensures hourly rates of pay are high enough to cover the cost of living. Ensure pay policies and decisions are transparent and fair and do not disadvantage any particular groups. Provide secure working hours to all staff and remove any barriers preventing people working the hours necessary to meet their financial and personal needs. Review your reward strategy; depending on affordability, consider offering a cost-of-living bonus, ensuring it would not adversely impact those who claim benefits like Universal Credit or Tax Credits. Ensure payroll is accurate and promptly pay any expenses. Review payslips to ensure they are accessible, clearly presented and simple to understand, and ensure that employees feel comfortable about raising any issues or mistakes.
Support in-work progression	Be open and transparent about how wages are set and how pay rises can be achieved by having a clear pay structure in place. Promote a culture of lifelong learning. Review opportunities for staff to develop and progress in their careers. Invest in training. Adopt an inclusive flexible working culture that ensures those who work flexibly are not overlooked for development opportunities, and quash any perceptions that flexible working is unsuitable for managerial roles. Develop your line managers, so that they are equipped to support their teams to progress
Benefit polices	Review your pension plan – does it enable employees to save adequately for their retirement? Does it take full advantage of tax-efficient savings opportunities such as AVCs and salary sacrifice? Consider offering flexible or hybrid working to help workers save money on food and commuting. offer occupational sick pay to enable people to take time off when sick without risking their livelihood. Include information about benefits and the importance of making long-term financial provisions in induction or mandatory training.
Provision of financial information, guidance, advice and signposting	Signpost employees to internal sources of help; for example, payroll for questions or issues with pay; EAP; mental health first-aiders; trade union representatives; line managers and HR. Signpost employees to external sources of free, confidential and independent money and debt advice; for example, from debt charities and organisations like the MaPS, Citizens Advice. Signpost employees to online budgeting/saving/retirement modellers or calculators. Provide links to information that gets ‘back to basics’ on financial topics; for example, how to budget, the link between pay and state benefits, credit scores and interest rates. An employee survey would highlight the demand for particular topics to improve personal finance management skills. Alert staff to the rise in investment scams, brand cloning and pensions scams activity.

Table 2: Expanding and leading organisations

Position on employer action spectrum	Type of action	Examples of actions
Expanding	Current benefit policies	Expand the concept of the reward package and total rewards (offer negotiated discounts on insurance, technology, etc); consider if the package offers sufficient help to reduce the living costs of low-income staff, such as for housing and utilities, or for those with caring responsibilities, etc. Provide (greater) access to flexible, discount, and voluntary benefits following consultation with staff. Consider provision of: an EAP access to debt counselling occupational sick pay to enable low-paid staff to take time off when ill without detriment interest-free crisis/hardship loans to help deal with unexpected financial shocks the option for employees to choose how often they’re paid, to help them better manage their money alerting people to financial scams to help them protect their finances mental health days – use national campaign days to engage with employees on mental health. Consider housing and utilities, childcare, travel and food and leisure benefits to mitigate the living costs of those affected by the 'poverty premium'. Offer incentives for financial wellbeing programme participation, eg earning wellness points towards cash incentives or discounted health insurance premiums. Consider offering seasonal support, such as to parents in the school holidays.
	Financial wellbeing policy	Explain what you’re doing on financial wellbeing, how, when, and why, and communicate this to employees and external stakeholders, such as investors. Package financial wellbeing guidance/information within the overall health and wellbeing strategy.
	Engage key stakeholders	Business leaders can role-model their support and help normalise conversations about financial issues by talking openly with employees about money, including the organisation’s financial situation. Improve line managers’ abilities and confidence in addressing financial issues to ensure they can offer the right support to staff through the cost-of-living crisis and can signpost to appropriate sources of support. Consider who else can offer staff support, eg trade union representatives, employee networks, mental health champions. Harness ideas from the workforce within communications. Run money-related challenges for employees – it’s a fun way to keep employees engaged with their goals.
	Provision of/signposting to financial information, guidance, advice	Target information based on the income level and age profile of the workforce. Train and support people managers (and mental health first-aiders) in providing/signposting to financial guidance, especially at times of significant employee life events; for example, promotion, birth of child, buying a home. Include a financial awareness programme within learning and development options. Agree an employee champion to promote financial wellbeing messages, information and guidance sources to their peers. Involve union/staff reps in information dissemination. Promote an equal balance between short-term (budgeting, debt repayment) and long-term (pensions, life insurance, etc) financial information/guidance. Trial different forms of financial wellness support; for example, one-to-one financial coaching, or online financial management tools, etc. Organise provision of independent financial advice on employee request.
Leading	Pay and benefits advice	Provide a comprehensive package of pay and wellbeing benefits to staff offering a high degree of personal flexibility and choice. Explore the suitability of benefits that give employees more control of their finances, such as earned salary access, set your own pay date, or set your own pay.
	Communications	Consider branding your organisation’s financial wellbeing approach and launch the concept organisation wide. Deliver targeted webinars run by external providers. Run regular financial education days, during which employees are exposed to information or can attend presentations or workshops on particular financial topics or offered access to independent financial advisers. People managers should ensure staff are able to ringfence time in their schedule to attend these. Link financial wellbeing messages to HR systems to harness significant life events in employee lifecycles; for example, maternity returners, bonus payouts and promotion. Enable and promote private employee forums for knowledge-sharing linked to financial topics/products/services. Consider communicating financial ‘app of the week’ initiatives for financial planning, with ‘user ratings’. Use insights from behavioural science. Consider on-demand delivery (just-in-time learning) so that knowledge is more likely to be used in making financial decisions. Help to reduce the stigma of money issues by sharing success stories or outcomes of those using employer-provided resources.
	Provision of/signposting to financial information, guidance, advice	Invest in an external provider to deliver a holistic financial education platform to staff to build knowledge across all areas of financial wellbeing.
	Use of technology	Explore fintech products that may suit your employees’ needs (financial tech products, mostly mobile compatible, from a range of industries, including banking, asset and wealth management, financial aggregators, debt management providers, salary advancement tech and money management systems). Health risk assessment technology providers can provide assessments of money concerns among employees, helping to identify key areas of concern. Provide access to customisable apps that provide a comprehensive approach to money management. Utilise technology to deliver communications at significant moments for the user.

4. Implement and embed

Implementation

Ensure you have a robust implementation plan developed at the outset of this stage. You could use the questions below to develop your plan.

Table 3: Example implementation plan development questions

Consideration	Type of action
What interventions are being rolled out?
Have we piloted the intervention and adjusted our approach based on feedback?
What is the timeline for interventions? Are we taking a staged approach or launching in full?
Who is being targeted and when?
What are our key objectives for the intervention/s?
What administration/governance responsibilities are there? Who has ownership of these?
For multinational organisations, do approaches need to be adapted for the different countries in which we are located?
What communication channels will we use?
When and how will we seek feedback from employees?
Have we established a baseline so that we can monitor change?
Is there enough flexibility in our design to ensure we can meet any changing needs of employees?
Are the interventions equally accessible to different employee groups, eg homeworkers, employees less confident with technology, etc?

Communication

It is necessary to communicate your financial wellbeing strategy to all stakeholders, including why it exists and how it is being embedded in the organisation.

Use multiple communication channels to reach the widest audience – for example, printed literature, an intranet or social technology, and ensure the language is inclusive. You could integrate your financial wellbeing communications with those for other initiatives, such as the wider health and wellbeing strategy or employee benefits.
Refresh communications on benefits already in place and alert employees to policy changes that will affect their financial wellbeing – for example, changes to income tax. Use employee events, company-wide meetings, and training and induction sessions, alongside national campaign days and calendar events, to promote your offering – for example, the Money and Pension Service’s ‘Talk Money Week’ or ‘Pensions’ Awareness Week’. Make it fun and relatable – it will boost engagement and may influence positive behaviour change.
Consider including your financial wellbeing offer in your organisation’s recruitment literature and annual report.
If possible, target key messages in your communications to reflect different groups in your organisation with different needs – such as lower-paid employees, young people, and female employees.
Encourage dialogue with employees about the current economic situation and the financial challenges facing them and the business. This may help to break down the stigma associated with money problems and encourage employees to raise concerns.

See our CIPD factsheet on employee communications for further information.

How should I communicate with employees who might be struggling financially?

Informally check in with individual employees to discuss how they are doing and how you might be able to help. Reiterate that any discussions are confidential. Ask open questions, offer understanding and be empathetic. Listen while remaining in control of the discussion. Explore the issues and refer to sources of internal and external help or relevant support. Aim to have a follow-up conversation with the employee after a period of time to check in. See the CIPD guide to having conversations about stress with employees.

Engagement

Ensure senior leadership, managers and employee representatives are actively engaged, capable and confident in supporting the strategy. Consider how they can also help to communicate the financial wellbeing offer.

5. Evaluate and evolve

The aims of this final stage are to measure effectiveness and set out how your plan can and should evolve in the future, given that this journey will likely involve a multi-year set of initiatives, requiring a strategic and integrated approach.

It is essential to evaluate the effectiveness of financial wellbeing activities to understand what’s working, what’s not and why, ensure any investment is generating value and impact, ensure staff want and value the support in place, and build a robust case for continuing and extending the support.

The effectiveness of financial wellbeing initiatives can be measured through a variety of metrics. The most common measures include:

participation rates in programmes – for example, financial literacy or retirement workshops
take-up of existing or new benefits – for example, pension plan and use of product discounts
employee engagement levels
data sourced from external financial wellbeing and EAP providers and staff surveys.

Obtaining this data allows you to respond to feedback and realign or adjust any initiatives that are not hitting the mark. Even the most successful employers regularly ‘tweak’ their approach to introduce new industry products and enhancements and respond to the take-up and effectiveness of their existing provisions.