The cost of living crisis has hardly been out of the headlines. And for good reason: rising prices for lots of essentials like food, fuel and energy, are forcing many people into financial stress. In our previous blog, we gave you three top tips for supporting your employees through this tough period. Now, we’d like to dig deeper into how you might restructure your employee benefits package to make sure you’re helping your employees where it’s needed most. After all, a successful strategy should deliver benefits that are timely and relevant to each employee’s situation. Otherwise, your benefits package could remain underused and underappreciated.
Lowering key costs to beat the cost of living crisis
Given the increase in prices, this could be a good time to invest in lowering some key costs for employees. For example:
Public transport costs are rising faster than ever before, with train tickets going up by 3.8%, the biggest increase in nine years. If employees drive to work instead, they’ll be hit by soaring fuel prices. Have you considered the following benefits? They could help your team lower their overheads:
- Season ticket loan: This is an interest free loan you make to employees to cover the lump-sum cost of an annual travelcard (and there are even flexi tickets for hybrid offices). Employees will pay back a monthly sum from their net pay. This can be helpful for those employees who would struggle to pull together the whole amount in one go.
- Cycle to work scheme: The standard cycle to work scheme uses salary sacrifice to cover the cost of a bicycle and safety equipment for any employees who want to switch their mode of transport. Not only can this save employees money on public transport or petrol costs, it can also cut their NI costs in a similar way to pension salary sacrifice.
- Electric vehicle scheme: You can also use salary sacrifice to help your employees purchase an electric car. Switching to an electric vehicle can save around £3,862 over seven years.
The NHS has done a brilliant job of keeping us safe and healthy during the pandemic, but there are some circumstances in which private medical treatment may be preferable or even necessary.
Offering health and/or dental insurance to your employees can help them cover the cost of treatments. At the moment, only 12% of people can access health insurance from their employer, but with demand for private healthcare soaring, it could be a very valuable benefit.
Mental health treatment can also be very expensive, and employee counselling packages are increasingly popular. Setting up an Employee Assistance Programme could be one way forward: these provide employees with online, telephone, or face-to-face counselling and support on a range of issues.
Whether you arrange discounts with retailers yourself, or buy into an existing benefits scheme that includes vouchers, these can be a great way to help employees cut costs. It’s important to consider delivery; something accessible, like an app or online card, can be more effective and engaging than a solution that needs to be downloaded or transferred between devices.
For many employees, the pressure of keeping their heads above water means they may take on multiple loans and credit cards. Paying very high interest rates, especially if they fail to clear their balance each month, can trap them in a vicious cycle of debt. Employers can offer a debt consolidation solution as a benefit. This lets an employee merge all debts into one, repaid at a vastly lower interest rate, making it far easier to manage. Repayments are taken out of their salary each month, lowering worries and making sure employees are left with a little disposable income for the important things in life.
Early access to pay
No matter how well they manage their money, some employees may struggle to make ends meet, especially towards the end of the month. The default action is to turn to credit cards or, even worse, payday loans which can have incredibly high interest rates. If repayments are not made in full each month, compound interest can force employees into a devastating debt spiral. Salary advance schemes give employees access to their (already earned) pay a week or two earlier than the planned date, so they’re less likely to use expensive credit card or payday loan solutions.
Protecting employees from risk
In addition to health insurance, you could offer your employees further types of insurance to increase their financial resilience (i.e. make them more able to survive times of difficulty). Have you introduced death in service to your benefits package? This could give your employees peace of mind that their loved ones will be able to manage if they pass away. You could also think about increasing your sick pay or parental pay beyond the statutory minimums.
Helping employees manage their money during the cost of living crisis
In addition to providing cost-saving benefits, you might consider helping them manage their spending on a daily basis to address the cost of living crisis. Budgeting can reveal where they are overspending, and where there’s room to reduce costs.
Although a pen and paper, or a spreadsheet, can be effective budgeting techniques, there’s a lot more that can be uncovered by using an open banking tool like Maji’s wealth dashboard. This allows someone to see all their accounts in one place, so they have a full understanding of their financial world. Then, they can view their actual expenditure across a range of categories to see where they’re breaking the budget.
That’s in addition to Maji’s other financial wellbeing tools and resources, including digital coaching, access to financial experts, a holistic financial planner and a diagnostic financial healthcheck to highlight where they might need extra support.
To book a demo with Maji and find out more about how we can support your employees, click here.