Salary Deduction Schemes Make Christmas More Affordable

Data from 2023 suggested that 43% of Brits used credit cards to cover Christmas spending, which is an estimated total of £14 billion spent on credit (Finder).

We’re not finished with the alarming stats just yet… By the end of July 2024, Brits owed £1,860.6 billion, of which £71.19 billion was outstanding credit card debt (The Money Charity).

As we explore in our podcast - Your Employee Financial Health Toolkit - many people fall into the trap of only managing to pay off the monthly interest, making it difficult to reduce the overall debt.

Help Employees Avoid Christmas Debt 

There are ways employees can avoid getting into debt over Christmas. They could spend less on gifts, set money aside throughout the year or take advantage of a salary deduction scheme like SmartPay. 

Spending Less on Gifts 

55% of Brits will spend most of their Christmas budget on gifts (IPA), suggesting that over half of our Nation isn’t planning to spend less.

Christmas isn’t just about giving presents. It’s about coming together as a family. However, there are circumstances where we may feel like we can’t cut back, such as when parents are considering what to get their children.

As a financial wellbeing employee benefit, SmartPay doesn’t encourage your people to live beyond their means - it gives them a smarter way to pay. We ensure you stay in control, giving you the ability to set scheme limits and restrict the application window period.

As an ethical partner, we ensure your SmartPay salary deduction scheme complies with the National Minimum Wage so you can have peace of mind knowing that all repayment plans are fair, legal, and have your employees’ wellbeing at its core.

Setting Money Aside

31% of British consumers will still be purchasing presents in December (IPA).

Planning ahead and setting money aside each month is an effective way to avoid Christmas debt or borrowing. Unfortunately, rising living costs have tightened household budgets, and not all employees can save a set amount each month.

In the UK, 11.5 million people have less than £100 in savings - less than the cost of a weekly shop for a family of four. Spreading the extra cost of Christmas over a few months may not be feasible. However, with SmartPay, your employees can spread their NET salary deductions over 12, 18, 24, or 36 months.

Longer scheme repayment plan = less financial impact. 

Cutting Back on Non-Essentials

We’ve seen this pattern in the UK for some time. It’s why our Employee Discounts Platform is so popular with people and businesses - it makes the things that bring us joy more affordable.

One person’s non-essential is another person’s must-have!

When we discussed our SmartPay offering with our Pluxeers, the subject of essential items was a key theme. Should it just be for expensive household purchases and emergencies, like a broken washing machine? Should we even consider it for Christmas?

The debate was genuine because we take pride in being a trusted partner and encourage responsible decisions that negatively impact employee financial wellbeing. Then, one of our colleagues said, “My children’s Christmas gifts are an essential item.”

This is the reality for many parents.

The concept of SmartPay isn’t to encourage employees to spend beyond their means. It’s to give them a better way to afford the things they’ll somehow find a way to pay for.

The Benefits of Salary Deduction Schemes

SmartPay, a salary deduction scheme, makes it even easier for your employees to spread the extra expense! 

Our scheme calculator ensures employees know exactly how much money you'll deduct from their salary and for how long.

With credit cards, the more you repay each month, the better because it reduces the interest. Still, you’ll always end up repaying more than the value of your purchase.SmartPay is different.

Your employees can use the scheme calculator to understand the difference between a 12, 18, or 24-month repayment plan. Whether they pay more over a shorter period or less for more is up to them - and you. Your employees repay the value of the goods they’ve purchased - no more, no less.

We’re proud to say that we have the widest range of retailers across tech and lifestyle salary deduction schemes on the market. SmartPay makes high-cost purchases with Currys, Wickes, John Lewis, Argos, Decathlon, Ikea, and B&Q, affordable for your employees.

Is SmartPay Another Loan?

SmartPay is an agreement between employer and employee - no other financial body.

As an employer, you cover the upfront costs and deduct the repayments from your employees’ NET salary. Unlike loans your employees can find on the high street, SmartPay doesn’t accumulate interest or impact their credit scores. Personal loans can positively impact an employee’s credit score but quickly turn negative if repayment issues arise.

More peace of mind + more financial support = less financial anxiety.

Why Salary Deduction Schemes are Good for Your Business

We’ve established why SmartPay is good for your people, but what can it do for your business?

Enhancing your Employee Value Proposition (EVP)

SmartPay helps you prioritise your employees’ financial wellbeing – their families too! A strong EVP enhances your ability to attract top talent and retain valuable employees.

62% of job seekers will only apply for a role that offers the majority of their EVP requirements (Gartner).

A competitive salary is no longer enough to make your business stand out from the crows. With reports of talent, labour and skills shortages filling the HR industry headlines, businesses must do all they can to present an attractive, inclusive and holistic package.

Your EVP is essential to a successful talent attraction and employee retention strategy. As a cost-neutral employee benefit, SmartPay is an impactful and cost-effective way to offer employees more without eating into your budget.

Measuring the Return on Investment

£71.19 billion was outstanding credit card debt is an astonishing figure. Employees relying on credit and loans often find themselves falling into unmanageable debt. Unsecured debts come with higher interest rates, making it easier to fall into a cycle of debt.

Increased debt = increased stress!

Mentally Resilient Employees

As we explore in our blog - Debt Awareness Week: Supporting Employees in Debt - money worries cost the UK economy £120bn and 17.5 million lost hours of work. Offering your employees a smarter way to pay reduces their money worries, making them more present, productive and engaged.

Salary deduction schemes, like SmartPay, give employees a safer way to spread the cost of expensive items without taking on credit or interest. The more you can do to reduce employee financial stress, the more appreciative and engaged your employees will be.

A loyal and engaged workforce boosts your Employer Brand, helps attract top talent and improves employee retention. Loyal employees are more productive, more present more innovative, too, creating a world of opportunities for your business.

Did you know that 5 million Brits live without a cooker, fridge, freezer or washing machine?

Our salary deduction scheme makes these essential household items affordable, creating happier and healthier employees.

Make Christmas More Arrofeable with SmartPay and Pluxee UK

Are you ready to boost your EVP, enhance employee financial wellbeing, attract top talent, and improve employee retention? Get in touch today.

FAQs

How do salary deduction schemes differ from salary sacrifice schemes?  Salary deduction scheme repayments are calculated from an employee’s NET salary. Salary sacrifice scheme repayments are calculated based on Gross repayments, thus reducing NI contributions.

What can employees use SmartPay for? You control your salary deduction scheme, so you have the authority over the approval process. You may wish to limit applications to what may be considered ‘emergency purchases’, or you could utilise it to its full potential as a cost-effective financial wellbeing tool.

Sources:

IPA

Finder

The Money Charity