Three financial institutions awarding cost of living bonuses

Inflation has now hit 9.4% in the UK. This is 40-year high, but the Bank of England is expecting it to hike even further to 11% by the end of the year.

This record-high inflation has triggered a cost of living crisis, where employees are struggling to make ends meet and afford to most basic, essential goods.

The situation is compounded by the fact that while wages are rising, they are not managing to keep up with inflation. In fact, in the UK, real pay has declined at the fastest rate since records began in 2001, according to the Office for National Statistics.

Given that pay rises seem to not be scratching the surface, what else can employers do to support their financially stressed workers?

One solution that has been latched onto by some big employers has been a one-time bonus. In fact, research by Mercer found that 19% of employers are offering a one-time lump sum to their workers/.

While a bonus has been the preferred option for employers in the engineering and energy sectors, three large UK financial institutions are also embracing one-time cost of living bonuses.

Let’s take a look inside their initiatives to support workers in these uncertain times.

1. Virgin Money

The most recent employer to announce a cost of living bonus for employees is Virgin Money, the banking arm of Richard Branson’s Virgin Group.

As reported by City AM, Virgin Money has decided to award a £1,000 bonus to workers who earn less than £50,000 (this is around 78% of its workforce). This comes after the bank implemented a 5% base salary jump in January.

According to an internal memo, CEO of Virgin Money David Duffy wrote: “The increase in the cost of living is on everyone’s minds, whether in political circles, in the media, or in the local supermarket.

“It’s also been part of many conversations among the Leadership Team because we know that many colleagues are experiencing additional pressure on their finances.”

Virgin Money has liaised with Unite the Union on the bonus move.

Unite’s national officer Caren Evans commented: “Unite has secured the £1,000 payment following a campaign to show Virgin Money UK how the increases to the cost of living are hitting the overwhelming majority of its staff.

“The union will now continue to campaign to secure a consolidated pay increase for the whole workforce to ensure that all wages increase in line with inflation.”

The bonus is expected to be paid out in the middle of August and will be subject to tax and national insurance. Unite shared that employees will have the option to have the bonus paid into their employee pension to help them with their long-term savings.

2. Lloyds Bank

Unite was also involved in a  bonus awarded to Lloyds’ employees.

In mid-June, Lloyds shared that it would give most of its 64,000 staff £1,000 to help them deal with the cost of living crisis. The payment will be made in August and only senior executives will be exempted.

Unite’s general secretary Sharon Graham shared: “Unite members’ collective action has put desperately needed money into the pockets of staff on the front line.

“This victory for Unite’s [Lloyds] pay campaign is an important step in changing the bank’s pay structures. Staff will welcome the £1,000 bonus but there is still a long way to go to eradicate low pay in that is one of the economy’s most profitable sectors.”

Unite also won cost of living-related pay rises at other banks like Natwest and Barclays. These pay rises, however, lag behind inflation.

3. Beazley

The final financial institution to implement a cost of living bonus is Lloyd of London insurer Beazley.

As reported by the Financial Times, Beazley plans to reward those earning under £50,000 with a bonus of £3,000 to help with the rising cost of living.

Beazley has a very competitive benefits package outside of this bonus – this includes financial wellbeing support, sabbatical leave, commuter benefits, flexible working hours, as well as a remote office setup allowance.

Ultimately, if you want to support your workers in these uncertain times – and it is important to do so given the looming recession isn’t slowing down the ‘Great Resignation’ – then consider a cost of living bonus.

This could make a real impact to workers’ finances in a way that a below-inflation pay rise might not.

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