The average household is 24 days from the breadline - we must help people build financial resilience
According to our research, 4.8 million workers over 50 are concerned about their job security due to COVID-19 pressures, and, 58% of people are concerned about the impact of the pandemic on their long-term savings | Credit: Legal & General
By helping people to exit financial exclusion and move to financial inclusion, we hope to reach our vision of inclusive capitalism.
The average household is 24 days from the breadline, with savings of £2,729 just about covering a month’s average salary.
Many households are far closer to the circumstances that can quickly lead to financial exclusion than they realise.
Our research shows that most people think they are 90 days from exhausting their savings. In today’s economy, it is important to realise that 60% of people living in poverty are in work; a job does not alleviate poverty to the extent that it may have done in the past.
When people experience a sudden financial shock, the gap between prosperity and poverty is often far smaller than they realise.
Moving from a monthly employed income to a weekly cash-based way of doing things can make a difficult situation worse because of the poverty premium, which can be as much as £490 over a year.
These realities are the reason that financial inclusion matters.
Legal & General has supported the work of the Financial Inclusion Commission since it began to campaign for ‘a financially inclusive United Kingdom in which every citizen can enjoy decent financial well-being’.
We see it as part of our role as a responsible business to help households manage in difficult circumstances.
Legal & General’s vision of Inclusive Capitalism is rooted in the idea that everyone should benefit from economic success, and financial inclusion is the way of achieving this.
The challenges of 2020 have changed the way that many households organise their finances.
We see it as part of our role as a responsible business to help households manage in difficult circumstances.
At the start the first lockdown in the UK, we formed a rapid action task force to ensure we were able to meet the evolving needs of customers who were financially impacted by COVID-19.
In our insurance business, for example, we have put in place deferred payment schemes for customers who were struggling to maintain their premium payments.
We have also probed for affordability challenges, when customers come through to our cancellation line, to see if alternative options can be explored to mean that valuable cover can be maintained (however although we have found this is only relevant in a small number of cancellations).
As at the end first week November, 320 people had taken the payment holiday option.
Of those that have come to the end of their payment holiday, around 60% have either repaid in full, or begun to pay by instalment.
This is approximately three times the normal level of recovered policies after a payment is missed.
According to our research, 4.8 million workers over 50 are concerned about their job security due to COVID-19 pressures, and, 58% of people are concerned about the impact of the pandemic on their long-term savings.
The research also showed that more than a third of over 50s have seen their household income decrease during the pandemic and 1.2m over 50s are now considering delaying their retirement because of COVID-19.
To help people address future financial uncertainty we have developed a free online course with The Open University, called ‘Retirement planning made easy’. The three hour course combines guidance, video and planning from how to budget for retirement to different kinds of pensions.
Financial inclusion is a cornerstone value for Legal & General, and aligns with our commitment to the United Nations’ Sustainable Development Goals.
Goal number one, ‘no poverty’, sits behind our work on financial inclusion. In 2017, we invested in a new fintech company called ‘Salary Finance’. At the time, many people on lower incomes were using expensive payday lenders and often ending up with more problems.
The damage to people’s wellbeing wrought by financial exclusion is not just about money; it is strongly associated with mental ill health. In research by Salary Finance, to contribute to their ‘Employer’s Guide to Financial Wellbeing’, they showed that people with financial worries are 4.1 times more likely to be suffering about anxiety and panic attacks, and 4.6 times more likely to be suffering from depression.
This is why we invested in Salary Finance, to create a way that people could build route out of financial difficulty.
Salary Finance enables employees to save and borrow from their salary directly.
Today, Salary Finance is available at over 500 progressive employers and 3 million employees across the US and UK.
As we face the challenges of the next few years, Legal & General will continue to look for innovative and effective ways to help people to manage their finances, and we will focus on helping people to build up their financial resilience.
By helping people to exit financial exclusion and move to financial inclusion, we hope to reach our vision of inclusive capitalism.
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