5 ways to unlock the hidden value of employee benefits

With inflation and the cost-of-living crisis continuing to squeeze wages, employers can help.

Employee financial wellbeing is topping the agenda for employers in the UK as employees continue to feel the pinch of the cost-of-living crisis – with rising prices and higher interest rates squeezing their finances.

According to the Office of National Statistics, around four in 10 adults are finding it difficult to afford their rent or mortgage payments, nearly half of adults said they were buying less food, and 46% of adults are using less fuel in their homes due to cost rises.

Furthermore, many employees don’t have a buffer against unexpected costs (earlier this year, the BBC reported that a quarter of adults have less than £100 in savings).

Unsurprisingly, the stress of dealing with this pressure affects every facet of employee wellbeing.

The ties between financial wellbeing and physical and emotional wellbeing have been well documented, and financial concerns have also been shown to negatively impact employee productivity; CIPD research shows that more than one-quarter of employees say money worries affect their ability to do their job.

For reward and benefit leaders looking for ways to support their workers through the cost-of-living crisis, an employee benefits toolkit can help salaries go further.

5 ways to unlock the hidden value of employee benefits

1. Use discounts to help stretch salaries

A growing number of organisations, across all sectors, have introduced discount schemes to help net pay go further by giving employees 24/7 access to significant savings. The average employee could save £1,000 a year by paying for their purchases via discounts or cashback.

With food price inflation consistently above 15% this year, employees are struggling with the rising cost of their weekly shop. By using a discounts and cashback platform to pay for their supermarket shop, employees could save at least £250 a year – helping to mitigate rising costs. And paying with an employee discount platform can also help employees save up to 2p per litre on fuel.

2. Salary sacrifice

Salary sacrifice is a helpful way for employees to be able to get things they need by spreading the cost, and making tax and/or national insurance savings. Whether it’s company cars, technology, cycle-to-work, or cinema discounts, having this kind of arrangement built into your toolkit means employees can get a better deal . The ability to spread the cost enables them to afford something that otherwise might be unaffordable – such as the latest technology.

3. Access to affordable credit

In the face of rising interest rates, finding more affordable ways for your workers to service debts can give them more control over their finances and help them become more optimistic about their financial future. Payroll lending offers employers a low-cost, risk-free way to do this; Salary Finance is a popular option in the UK.

Removing the cost of existing debt is a straightforward way to alleviate some of the cost-of-living pressures and reduce the percentage of net pay employees are using to pay off debt.

4. Help employees find the best deals

Technology can make it easier for employees to understand if they could be getting a better deal on two of the most major costs they face – mortgage rates and energy prices. Dashly’s 24/7 Mortgage Monitor’s always-on algorithm tracks a mortgage to make sure it is the best deal by comparing against the whole market, which, combined with personalised advice from a mortgage advisor, can help save employees thousands of pounds.

Similarly, Switchd notifies employees when energy prices start to drop and will switch users to the best energy deal for them. After a drop in the energy price cap last month, more suppliers are starting to offer fixed deals to customers (although switching may not suit all circumstances).

5. Tools that help reveal the value of benefits

Financial education tools (such as SaveSmart) and financial advice benefits (like Quilter) can help employees build financial skills and start planning for the future.

With 85% of employees saying that they trust the information and advice that their employer gives them (according to Benifex’s 2023 Evolution research), financial communication and educational content presents a significant opportunity to make a real difference to employees’ finances – and can help them to better leverage the tools available to them as part of their benefits package.

Financial wellbeing is number one for employees

Benifex’s 2023 Evolution research surveyed more than 2,000 global employees and employers to uncover changing employee expectations – and how reward and benefits are adapting.

It found that employees are attaching greater importance to their benefits package. With rising living costs affecting people worldwide, employees are increasingly seeing benefits as crucial in improving their financial wellbeing. Almost two-thirds (65%) of employees say benefits are very important in supporting their financial wellbeing, compared with 53% in 2022.

To learn more about how to unlock the value of benefits and support employee wellbeing during the cost-of-living crisis, download our special report.