Howden Employee Benefits has launched a new ‘Workplace Finance’ report, looking at the different propositions available in this growing new market.
The report looks in details at the solutions offered by the three main workplace place finance providers: Neyber, FairQuid and Salary Finance.
Howden says that rising levels of personal debt and wage stagnation have driven demand for such services. It points out that one in eight workers are now in poverty, according to the Joseph Rowntree Foundation, while the Money Advice Service recently found that one in five adults say they have debt problems which are causing mental health issues.
Howden’s head of benefits strategy, Steve Herbert says: “The rise in personal debt and financial stress can have a major impact on the workplace.
“A financially stressed employee is likely to be less focused, engaged and productive, so it’s in an employer’s interest to support employees experiencing personal finance issues.
“We’re seeing more employers taking positive steps to support employees by introducing financial education programmes which can help employees to better understand and manage their monthly finances.”
The report says many people in debt will initially turn to traditional loan providers. However if they have poor credit scores, they may be declined and then be forced to borrow for those charging high interest on debt. This can make the problem worse in the long time. Employers who can provide some financial options may be able to stop these problems spiralling.
The report highlights workplace finance solutions can also be helpful for major and often unexpected costs that can’t be met out of an employee’s everyday budget, such as the family car needing urgent repairs or the boiler breaking down.
The key advantage of workplace finance solutions is that lending decisions are based on more than an individual’s credit scores and affordability. Lenders consider someone’s employment status, service history and salary level and, as repayments are directly deducted from salary via payroll, they have more confidence the loan commitments will be maintained.
Workplace Finance Solutions also have other useful features, such as short-term savings vehicles, with contributions deducted via payroll, as well as credit score checkers and information about where to access debt management advice and online financial tools.
Herbert adds: “Increasingly, employers are understanding the vital role of financial education in supporting employee wellbeing.
“More organisations are now looking to include these workplace finance solutions within their employee benefits and remuneration packages. This report will help employers make informed decisions about the most appropriate solution for their workforce.”