Pandemic takes its toll on financial security as far more Brits seek support

Published by David Collington on

Our expert

  • David Collington

    David Collington

    Head of Benefits Consultancy

    • The pandemic has polarised the nation’s finances, with far more UK employees seeking financial support in the past year, while others have seen savings surge.   
    • A quarter (24%) of employees have had to ask family and friends for financial support during the pandemic.
    • Twice as many employees with a disability than without have taken measures like taking out a payday loan, looking into their eligibility of state benefits, and using a foodbank – showing that the pandemic has worsened inequalities in the UK.
    • On the other end of the spectrum, well over half (57%) of UK employees have spent less money during the pandemic, while two fifths (40%) have started saving more. 

    The pandemic has forced more UK employees to seek financial support in the past year, with Covid-19 leaving a significant legacy on people’s personal finances. Our new research sheds light on the personal finance decisions that UK working adults have made over the course of the pandemic – and the stark disparities between different demographics. 

    A quarter (24%) of employees have had to ask family and friends for financial support during the pandemic. This is almost triple the amount of people who had done so in April 2020 (9%), suggesting that the long-term impact of Covid-19 has been more financially damaging than the immediate aftermath. 

    A quarter (26%) of employees have looked into their eligibility of state benefits, while a further fifth (21%) plan on doing so. This figure is significantly higher for employees with a disability – at over two fifths (42%) compared to 24% of those without any disabilities. 

    Employees have turned to lenders and charities for support over the past year as the lockdowns have taken their toll on financial security.

    "Taking time to analyse the demographics of a workforce will ensure that individual needs are met, and nobody is left behind when times are tough."
    David Collington Principal, Barnett Waddingham

    Over a tenth (13%) have taken out a bank loan and a further 12% a payday loan, more than twice as many as had done so the same time last year, at 5% and 4% respectively.

    A tenth (10%) of employees have also asked a money health charity for help and a further 11% have started using a food bank, more than double those that had done so last year at 4% and 5% respectively. People with a disability are twice as likely to have started using a food bank, at a fifth (21%) compared to a tenth of those without a disability. 

    For a significant number of employees, the pandemic has also impacted their mental health. Over a tenth (13%) have asked a mental health charity for help, while a fifth (20%) plan to do so. Younger people have been more likely to seek mental health support, at nearly a fifth (18%) of 25-34-year-olds compared to just 6% of 45-64-year-olds. 

    Requiring financial support Asked family/ friends for financial support Asked employer for financial support Looked into eligibility of state benefits Taken out a bank loan Taken out a pay day loan Asked a money charity for help Started using a food bank Asked a mental health charity for help
    2021 - all 24% 10% 26% 13% 12% 10% 11% 13%
    2020 - all 9% 7% 18% 5% 4% 4% 5% 6%
    2021 - Disability 36% 24% 42% 18% 23% 19% 21% 22%
    2021 - No disability 23% 9% 24% 13% 11% 9% 10% 12%

    The good news

    But the pandemic has had a polarising effect on personal finances in the UK, with the lockdowns giving many people the opportunity to spend less and save more.

    Well over half (57%) of UK employees have spent less money during the pandemic. This is truest of older generations, at three fifths (60%) of 45-65-year olds compared under half (49%) of 18-24-year olds, while women are over 10% more likely than men to have spent less, at 60% compared to 49%. 

    The pandemic has also created a nation of savers, with two fifths (40%) of employees saying they’ve started saving more, and a further three tenths intending to do so. This is significantly higher than the amount of people who were able to save more last year – at under three tenths (29%). 

    Full-time employees who have been working at home during the pandemic have been the biggest savers, with over half (54%) being able to save more, compared to 38% of full-time employees who have had to remain working at their normal place of work – suggesting that key workers have been under greater financial pressure.  

    People have also taken time during the lockdown to consider spending habits. Two fifths (38%) of employees have dedicated time to re-budgeting finances, and a further quarter (26%) plan to do so. More women have taken the time than men, at 41% compared to 31%. 

    Financial improvements Spent less money Started saving more Dedicated time to re-budgeting finances Changed investment strategy
    2021 - all 57% 40% 38% 17%
    2020 - all 67% 29% 34% 13%
    2021 - Women 60% 42% 41% 15%
    2021 - Men 49% 38% 31% 22%

    David Collington, Principal at Barnett Waddingham, comments: “The pandemic has polarised the nation’s finances, with some people grappling with financial difficulty while others amass unexpected savings – we may be in the same storm, but people are in very different boats. As such, it’s essential that employers don’t assume that their policies will apply universally or equally. Taking time to analyse the demographics of a workforce will ensure that individual needs are met, and nobody is left behind when times are tough. 

    “In times like these, consistent engagement with employees is key to improving wellbeing. Putting the work in early – be it through developing effective surveys or improving communication with staff so that they feel supported – will reap rewards in the long-term. As we come out of the other side of the pandemic, the strongest companies will be those that continue to provide support, listen to their employees, and prioritise their wellbeing. And it is these companies which will in turn see the biggest impact on recruitment, retention, and productivity.”

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