Payroll and financial education combined can help to tackle our growing financial cancer
13 June 2014
With personal debt still continuing to spiral upwards, the CIPP has announced new guidance for businesses who are in a position to support their employees.
Lindsey Melvin, CEO of the CIPP, said: “Companies can make a big difference to their employees by encouraging saving through payroll and facilitating the repayment of Credit Union loans through their payroll.
“To do this, businesses should align themselves to the most appropriate credit union for them (so for instance if you are in retail you would link to the retail credit union) and should actively encourage employees to use this link to help to manage their personal finances. The logic behind this is twofold; interest rates on credit union loans are generally less if the repayment is made through payroll (1 per cent bad debt rate as opposed to 8 per cent) and psychologically what you haven’t got at your disposal you don’t tend to miss.
“We passionately believe that businesses should actively educate their staff in financial/budgeting skills as this will have a definite return on investment in terms of staff motivation and absence levels. This education support should then be manifested into payroll saving.
“The payroll industry can actively support this by not making any charges on the employee for this saving/paying through payroll facility and by actively engaging with credit unions or other form of affordable debt on the procedures and processes which need to be in place. The CIPP has developed a blueprint for this.”