Innovative investment to increase social and financial inclusion
19 Jan 2018
Legal & General Group has recently delivered yet another programme to help harder to reach families to become more resilient through its equity stake in Salary Finance. Asesh Sarkar, Global Chief Executive at Salary Finance explains how the partnership will improve the finances of people’s lives in the UK and USA.
This investment is directly in line with our public commitment to relieve poverty in line with the United Nations Sustainable Development Goals (UNSDG’s).
Graham Precey, Head of Corporate Responsibility & Ethics explains “Critical Friends such as UK Credit Unions have already helped us to understand what it really takes to build families out of poverty; we have award winning products reaching rural communities in India. Our focus is now concentrated on building stronger family resilience in the UK and US Markets through our investment in Salary Finance”
Asesh Sarkar, Global Chief Executive at Salary Finance explains how the partnership will work to improve the finances of millions of people’s lives in the UK and USA.
“Legal & General invested in Salary Finance last year as part of our commitment to building a better society and improving the financial resilience of all employees. The partnership is off to a strong start, with over 250,000 new employees being on-boarded in the four months since investment, and the business well on its way to reaching over 1 million employees.
The vision is simple: to accelerate an employees’ journey from debt to savings, and in doing so, improving their financial and mental wellbeing, and their engagement at work.
Whilst the vision is simple, the employee need is enormous. The traditional financial ecosystem is failing society: approximately 40% of working people have no material savings; millennials have half of the wealth of their parents’ generation at the same age; and unsecured debt continues to rise, up 25% since 2014. As well as debt levels rising, so has the cost / interest rate of that debt for many, particularly those unable to access bank finance, causing a downward spiral.
The Salary Finance platform provides an employer-led solution that can be disseminated at scale. The platform has three main parts:
- Learn: financial education resources and tools.
- Borrow: low interest employee loans to help employees replace / avoid high interest debt, enabled by repayments being collected from payroll.
- Savings: a suite of salary linked savings products, designed using behavioural science, to make saving easy by deducting directly from salary.
The Salary Finance LinkedIn page has testimonial after testimonial of the transformative difference we make for employees. From graduates needing a rental deposit, to employees being saved from the never ending spiral of payday loans, to employees seeing their credit score increase and becoming eligible for a mortgage on their first home. The mental wellbeing aspect also shines through, as employees talk of less stress and increased confidence. Having launched Salary Finance to all L&G UK employees (and soon US employees), L&G has seen these results first hand and we are hugely proud.
There is no doubt that auto enrolment has got more people saving for the long term and got younger people saving through their salary. Auto enrolment has also opened the pipework for salary deductions to be made from employees for a whole host of resilience based products and services. Salary Finance is well positioned in partnership with Legal & General because of its links to many major employers who have group protection and work place pensions
So far, Salary Finance has saved each employee customer an average of £600 in interest and helped them to get out of debt 6 - 12 months sooner. It is consistently an employer’s most impactful employee benefit; with the data showing Salary Finance employee customers are 40% less likely to leave their employer.
The platform is no cost for employers, with no risk and no liability. Progressive employers are working with us to solve those financial issues that employees face when they walk in the door to work each day. Just being a living wage employer, just offering Employee Assistance Programmes, just offering loans for rental deposits, season ticket loans and pensions is simply not enough for them. They want to really enhance the financial health of their employees as part of their new psychological contract
Employers from all sectors have already signed-up, providing references for others to follow, to solve one of the biggest problems in society today which is in work financial hardship. Clients include E.ON, Metro Bank, Saga, Hays, Dunelm, Calsberg, and many NHS Trusts, Councils and Schools.
If you would like to support the financial wellbeing of your employees please do get in touch.