Over a quarter of UK employees struggling to meet day-to-day living costs

London, July 9th, 2018

Almost a third of UK adults (30%) often or constantly worry that they are unable to meet day-to-day living costs, finds research released today by Thomsons Online Benefits.

The survey of 2,000 private sector employees reveals the relentless financial pressure felt by UK adults, at a time when wages are only just keeping up with inflation and households are facing the biggest council tax rise in the last 14 years putting further strain on households. Against this backdrop, 28% say their income just about covers their living expenses, or that they have to borrow to cover these.

While credit card spending continues to rise, up 8.8% in the last 12 months, only 40% of Brits feel that they manage their debt well, with 10% worrying about debts or really struggling to keep up with repayments. Despite this, over a quarter would fund an unexpected expense of £1,000 by using a credit card.

“This is a deeply concerning trend,” comments Neil Atkinson, Head of Pensions and Financial Wellness, Thomsons Online Benefits. “Keeping roughly three months’ outgoings in easy to access savings is recommended but even having £1000 would make a meaningful difference to UK adults.  At present many are unable to maintain this financial buffer though. Instead, they’re reaching for credit cards to deal with unexpected expenses, opening themselves up to sky-high APRs and increasing debt. The average interest rate on credit card lending bearing interest was 17.96% in December. This is 17.46% above the Bank of England Base Rate of 0.5%.

“There’s a temptation for people to brush poor financial health under the carpet, but 25% of people admit to money problems so substantial they affect their ability to do their job. Employers have a vested interest in helping their employees address these.”

Despite this, employers are proving slow off the mark to provide assistance. For example, only 6% of employers provide debt consolidation via workplace lending and counselling services as part of their benefits schemes. This is a missed opportunity for employers at a time when 25% of the UK workforce have little or no confidence in their financial future, with the same proportion believing they have little or no chance of saving adequately for their retirement.

With more innovative financial products coming to market, employers should look to offer workplace lending as a service to employees which goes far beyond traditional debt consolidation and includes other lending such as personal life loans to help with moving house, season ticket loans, or personal development.

This lack of clear employer support means that only 10% of UK adults would currently seek help and information from their employer – half of those that would look to a friend (19%), and just a third (29%) of those that would to talk to a family member. This is despite 88% being open to using financial education and products delivered via their employer.

“We’ve already witnessed UK employers take on an integral role in people’s financial futures with the introduction of auto-enrolment, but there is clearly huge scope for them to do more,” comments Atkinson.

“Employees today are dealing with a huge range of financial pressures preventing them from meeting their day-to-day living expenses – let alone saving into a pension. They are hungry for help and willing to accept this from their employer. Forward thinking companies like OVO Energy are already embracing financial wellness.”

“We’re always looking to support our people and help make a real difference to their lives,” said Joanna Fairweather, Reward Manager at OVO Energy. “We've got a young workforce here at OVO so we wanted to go beyond basic measures and offer something that enables them to improve their financial situation now and in the future. That's why we developed a range of flexible benefit options for our employees including investing their flexible benefits fund into a workplace ISA, free mortgage brokering, a host of discounted shopping deals, and a creative approach through offering an OVO Culture Card, giving free or discounted entry to attractions and galleries."

Atkinson concludes, “All that remains now is for UK employers to augment and diversify the financial support they offer their people. The benefits of doing so will be felt threefold; by their employees, themselves and the UK economy.”


About the research

The research surveyed 2000 UK adults working in private sector organisations of over 500 employees on May 2018.