How financial advice can help trusts become great employers

John Cunliffe, Specialist Financial Adviser at Wesleyan Financial Services, says that providing greater financial wellbeing guidance for employees is essential for individuals and organisations. He also offers tips on how academy trusts can best support their staff in this important area.

The NASUWT’s Teacher Wellbeing Survey 2024 found that 84% of teachers have experienced more work-related stress in the last 12 months.* It is an indication of the growing challenges teachers, headteachers and other school staff are facing in the workplace, and underlines why it is imperative for trusts to focus on delivering a healthy, supportive environment. This should include supporting employees’ financial wellbeing.

The Government’s Money and Pensions Service defines financial wellbeing as “feeling secure and in control of your finances, both now and in the future. It’s knowing that you can pay the bills today, can deal with the unexpected, and are on track for a healthy financial future.”

However, with an ongoing cost-of-living crisis, this sense of security might be hard to achieve. And the mental strain of living with financial worries can be immense – not just contributing to poor mental wellbeing, but potentially poor physical wellbeing too.

Taking the time to ensure staff have the support they need to achieve financial wellbeing can improve morale and potentially reduce absence among colleagues. In turn, this can save schools and academy trusts from the cost of supply cover, minimising pressure on the wider workforce.

It can also help to improve performance and plays a key role in attracting and retaining the very best talent. In fact, in PWC’s 2023 financial wellness survey, 73% of financially stressed employees and 54% of non-financially stressed employees said they would be attracted to another employer that cares about their financial wellbeing.

But how can trusts provide financial wellbeing support? What sort of areas should this cover? Here, we explore some of the key things to consider.

Income protection

There are always likely to be bumps in the road in life, and an important part of financial wellbeing is being able to overcome any unexpected obstacles, such as a prolonged period of illness.

While it’s impossible to predict what might happen and when it will occur, trust employees should be taking steps to protect themselves should any issues arise.

Income protection insurance is a good starting point. This safeguards an individual’s salary when they’re off work through ill health by paying a monthly income, covering their bills should their sick pay entitlement run out.

Staff should take the time to consider whether they need critical illness cover, which offers the protection of a tax-free lump sum should they receive a serious diagnosis. Life assurance packages can also protect their family’s financial future should staff pass away while still working. There are tools available that can analyse an individual’s health risk and provide guidance as to the level of cover they may need.

Wesleyan Financial Services is a broker and its insurance products are provided by a number of selected insurers.

Tax treatment depends on your individual circumstances and may be subject to change in future.

Mortgages

Mortgages are one of the biggest financial commitments anyone will make in life, which is why it pays to be prepared. However, navigating the mortgage market can be particularly challenging at a time of interest rate uncertainty. Helping staff access mortgage advice sooner rather than later can help them to get a good grasp on their finances and ease the already-complicated house-buying process as much as possible.

Of course, teaching encompasses a wide variety of roles and contract types, not to mention a very broad salary scale. So, while some teachers may find it easy to get a mortgage, others may struggle to get the deal they want.

For example, for supply teachers or new teachers on a 12-month contract, lenders may view the lack of a permanent role as a lack of security. That’s why it can be valuable to facilitate access for staff to a specialist mortgage broker, who understands the nature of their job and can secure the best deal for them.

People in public sector jobs, including school staff, can often be seen favourably by lenders. An old ‘key worker’ mortgage scheme ended in 2019, but it is still possible to get special mortgage rates through a professional mortgage, something which a specialist broker can help to identify and access.

Professional mortgages won’t be found everywhere, but lenders can provide better interest rates, more generous offers and reduced-deposit mortgages for teachers in many cases. Teaching assistants, nursery nurses and children’s therapists should also explore whether they are eligible for these benefits too.

Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments.

Wesleyan Financial Services provides broker and advice services, for which a fee may apply. Product fees may be payable to the lender.

Pensions

A trust’s financial wellbeing approach shouldn’t just be focussed on supporting staff during their time spent in their organisation – it should also help staff prepare for life after work.

That can mean guiding them through their retirement options and helping them to understand the value of contributing towards their pension at every stage of their career.

From the conversations we’ve been having, we know many teachers have put their future planning on the back burner in order to focus on the here and now. For example, some have dipped into their savings to meet day-to-day costs, or made changes to their pension plans.

Department for Education data from June 2024, analysed by Wesleyan, shows that in the 12 months to May 2024, a total of 13,112 teachers opted out of the Teachers’ Pension Scheme (TPS) - an increase of more than 1,600 year-on-year. The single biggest reason for this was affordability.

Leaving the TPS means staff will miss out on the enormous benefits of the scheme, which is inflation-proofed, guaranteed by the UK government and provides retirement income tied directly to a teacher’s salary. These are benefits that can be hard, or impossible, to replicate in private sector schemes.

Anyone considering leaving should be made aware of these risks before making a decision. Facilitating access to a Specialist Financial Adviser can help them make a much more informed decision.

Flexibility in retirement

The nature of the retirement that employees want might also vary from staff member to staff member. And these preferences can each carry their own financial implications.

For example, a recent survey commissioned by Wesleyan found that 53% of school leaders aged 50 and older said they would be interested in taking “phased” retirement, with just 15% wanting to retire fully from the profession.

Phased retirement allows teachers to keep working, albeit fewer hours or in a less senior position, while taking up to 75% of their pension. There are some more complex rules around it – for example, teachers’ reduction in workload must mean that their salaries also reduce by at least 20% – but an expert can help explain the rules and advise on what this means for individual circumstances.

Overall, it’s an appealing option that gives teachers more flexibility with the direction of their career, and the shape of their retirement. It also enables trusts to keep experienced staff in their schools for longer.

By giving teachers the tools to better understand the range of retirement options available to them, trusts can better support their plans – and their financial wellbeing – but also potentially benefit from their expertise and skills for longer than they otherwise would.

Implementing a long-term strategy

The ‘right’ way to implement an effective financial wellbeing strategy will vary depending on your trust’s unique circumstances, and the circumstances of the individual members of staff. It will no doubt require a tailored approach, but there are some general principles that should guide your thinking.

There’s a risk that financial wellbeing can become a ‘once a year’ or temporary focus, but this simply isn’t enough. Trust leaders should consider dedicating the appropriate resources and attention throughout the year to ensure staff can access support whenever they need it.

While there should also be a focus on empowering staff to talk about their financial worries, it remains a sensitive topic. Providing discreet, professional third-party resources that staff can access as and when they need to reduces the risk that they simply don’t take action or seek help because they don’t want to disclose personal details or struggles to a colleague.

You’ll undoubtedly be working with limited time and money to support a wellbeing programme, so consider taking the simple, but effective, step of asking your staff what wellbeing support they would value most. A confidential staff wellbeing survey, repeated at least annually, can help identify areas to prioritise. Together with an expert partner, you can then put in place a programme that will deliver the best possible value for money.

What is Wesleyan Financial Services, and how can it help?

Wesleyan Financial Services is on hand to help academy trusts on their financial wellbeing journeys.

We are a specialist financial services provider for teachers. Our team of dedicated Specialist Financial Advisers are ready to offer expert one-off or ongoing advice at every step of a teacher’s career, from starting training through to planning retirement. This includes financial advice on investments, mortgages and protection, plus guidance on the Teachers’ Pension Scheme – delivered on a remote or in-person basis to fit around teachers’ busy schedules.

We support trust leaders and their staff on an individual basis with their financial plans, and can work with trusts to help build financial wellbeing within their schools and networks through financial education, including webinars. Simply book an appointment today. Charges may apply.

* The NASUWT Wellbeing at Work Survey 2024

Keep in mind that the value of investments can go down as well as up, and you may get back less than you put in.