A new report from leading health and wellbeing insurer BHSF has revealed that UK employees are at risk of a severe financial shock in the event of ill-health, with many being unable to pay their household bills for more than six to eight weeks.
The report, titled ‘A high wire with no safety net’, details the perilous state of many employee’s finances, with 37% admitting that they could not pay their bills in the event of ill health and 28% saying that they would resort to using credit cards for unexpected bills.
The dire situation is exacerbated by the lack of savings and the fact that two thirds of the entire UK workforce have no sick pay provision beyond the statutory minimum.
Brain Hall, Managing Director of BHSF Employee Benefits, commented: “The combination of a lack of savings allied to zero sick pay provision, other than the statutory minimum of £89.35 per week, leaves many employees walking a high wire with no safety net. By the time mortgages, car repayments, Council Tax and four-weekly shops are taken into account, the vast majority of the UK’s workforce will find themselves in dire financial straits in a very short period of time, many will be forced back to work when they are not fit to return.”
However, the report also demonstrates that employees are overly-optimistic about their ability to withstand financial shock, with many believing they could last for up to six months. This is despite high levels of unsecured debt, such as credit cards, averaging circa £1,910, and inadequate savings.
“It is very worrying that employees appear to be in a state of denial over how precarious their financial situation is, in reality,” says Mr Hall. “All it takes is one short bout of ill-health to leave two thirds of the entire UK workforce in serious financial straits which could take many years to recover from. Average savings will last for little more than six to eight weeks, if that.”
It is those that are most relied upon that are most at risk – the ‘sandwich generation’. The 30-44 age group was found to be the least resilient when it came to financial problems and more than average unsecured debt. In fact, debt levels have increased for this group over the last five years. Meaning that this age group, while supporting elderly parents and children, are being stretched to breaking point, with no safety net should they be unable to work due to ill health.
The report also details the chronic over-reliance on credit cards to fund unexpected bills, such as major car repair or a boiler replacement, with 28 per cent of the UK’s working population saying they would fund unexpected bills with a credit card.
Details were also highlighted about the mental impact of financial stress with half of the UK’s working population admitting that they have lost sleep due to financial worries, and a third admitting that financial stress is impacting their job performance. Worse still, 13 percent admit financial stress is a constant problem.
Mr Hall says that employers can do more to help employees become more financially resilient by organising sick pay insurance schemes which can provide a safety net at low cost to the employee and no cost the employer. At present, the report suggests that just 30 percent of employees benefit from an employer-organised scheme.
“There are low cost insurance schemes available that can provide a safety net, but it needs employers to act as the catalyst in the workplace. If employees truly are the most valuable asset, it is incumbent upon employers to be brave and to help educate their workforce about financial issues such as sick pay. All-too-often the subject is swept under the carpet or not adequately addressed with a negative impact on employee wellbeing and mental health.”
The BHSF ‘A high wire with no safety net’ report is broken down into five sections.
- Section 1 – Income, savings and debt
- Section 2 – Financial resilience
- Section 3 – Financial stress and its impact on mental wellbeing
- Section 4 – The safety net
- Expert view – Jo Thresher – Better with Money
BHSF believes that this report will help employers take the lead, providing the right support for their employees and equipping them with the tools they need during financial crisis.
BHSF’s ‘A high wire with no safety net’ report is available to download here.
If you would like information on how to protect you employees against financial hardship of long-term incapacity please contact advo here.
You can view the BHFS press release in full here.