A fifth of employers offer a payroll loan scheme
14 August 2018
When the press release from the Co-op revealed that UK workers could save more than £250 million a year in interest rate charges if companies introduced a payroll loan scheme, this prompted us to run a quick poll.
By providing colleagues with the ability to repay loans direct from their salaries, the Co-op offers a practical alternative to high-cost forms of borrowing, which can adversely impact on the lives of individuals and their families.
We ran a poll through July and the beginning of August which asked:
As an employer/business owner would you consider offering employees/workers a payroll loan scheme to enable them to repay loans directly through their salaries?
We received 352 responses in total.
Encouragingly almost a fifth (19%) already offer a scheme and just over a quarter (27%) would consider offering one
Just over a third (34%) said they would not consider offering a scheme and the remaining fifth (19%) were unsure if they would. This could be down to being a small business with concerns of the admin burden or possibly not knowing what is involved
According to the Financial Conduct Authority (FCA) around 300,000 people, a month take out high-cost short-term credit. At the end of 2016, 1.6 million people had payday loan debt, with the average loan just over £300. Around one in eight of the debtors were in arrears.
The CIPP recognises the value that payroll loan schemes can bring to the employee and the role that the payroll department plays in assisting employees with their financial awareness, and avoid financial hardship.