A significant proportion of UK adults have witnessed their financial resilience deteriorate as a result of the COVID-19 pandemic, new research shows, highlighting the need for employers to place more emphasis on employee financial wellbeing initiatives.
According to the survey for MetLife, conducted among 2,000 UK adults by Censuswide earlier this year, one in four adults in the UK have no disposable income to fall back on to pay bills, rent or their mortgage, while one in five do not consider themselves financially resilient and would need to rely on credit, such as loans and credit cards, to cover their monthly bills.
Despite 60% of those surveyed saying they feel financially resilient, upon further questioning, almost one-third (29%) admitted that this would only be the case if they were to receive help from their partner, a family member or someone else, the MetLife study found.
[Related reading: Many Employers Not Prioritising Financial Wellbeing At Work - CIPD]
The Covid-19 pandemic has caused around one-third of UK adults’ financial situation to worsen, of which almost one in 10 (8%) say it has done so significantly. A further one in five (19%) say their financial situation has worsened as a result of the pandemic, but only slightly.
According to MetLife, this means approximately 10 million adults in the UK are not financially resilient.
The MetLife survey also found that a third (33%) of UK adults are worried about their financial situation when thinking about it in the short-term (6-12 months). When thinking about the longer-term (more than a year), this proportion drops slightly to 31%.
More than a fifth (22%) of homeowners with mortgages would not consider taking out protection, regardless of the circumstances.
In fact, the majority of homeowners said it would take a radical change in circumstances for them to consider purchasing a financial protection product. For example, 31% of homeowners said falling ill would make them consider such a move, while 25% said a change in employment status would or having an accident (24%).
Ironically, one in seven (14%) UK homeowners admitted they regret not taking out a protection policy which would have supported them with their mortgage obligations in the past. This is likely because a third (34%) of respondents said they have had to take four weeks or more off work due to accident or illness.
Speaking about the findings of the research, Rich Horner, head of individual protection at MetLife, said: "Many financial fears have come true for so many over the last 12 months. Having to use up savings to make ends meet, borrow money, pay cuts, taking time off work unpaid due to accident or illness or to care for a loved one - the list is endless. The ‘it'll never happen to me' premise has never felt so prominent.
So, although worrying, the reality is that many people have no savings to fall back on. And unfortunately, it can easily spiral. The combination of worrying about having no disposable income and not having any savings can have a significant impact on mental health and an uneasy feeling of being extremely financially vulnerable."
The findings of this MetLife research highlight the precarious financial positions many employees find themselves in. While employers cannot manage their employees’ money for them, they can provide relevant guidance and support on employee financial wellbeing where needed.
Contact Premier Choice today and we can help you to support your employees with the right financial wellbeing strategy.