Rising childcare costs and increasing pressure on those with caring responsibilities for older family members are putting a growing strain on employees’ financial wellbeing – with long-term implications for retirement outcomes, according to research from REBA in association with WEALTH at work.
Childcare costs are a major driver of financial strain. Findings show that almost a quarter (24%) of parents could be forced to leave the workforce if costs rise further, while nearly two-thirds (59%) say increasing nursery fees would result in reduced working hours or having to leave work altogether – directly impacting income and the ability to save.
Alongside this, more than half (55%) of carers who have reduced their working hours to care for others say they have been unable to save as much for the future, highlighting how caring roles can disrupt long-term financial planning.
These challenges are contributing to lower financial resilience and increasing the risk that employees will not be able to build sufficient savings for later life. Reduced earnings, career breaks and competing financial priorities can all limit the ability to contribute consistently to long-term savings, such as pensions.
Despite this, financial wellbeing support in the workplace is not yet universal, with just over half (54%) of employers currently offering or planning to offer enhanced financial support for parents and carers.
At the same time, low levels of financial literacy around pensions remain a challenge, with nearly three quarters (71%) of employers identifying this as a key barrier to retirement adequacy and almost two-fifths (39%) of UK adults lacking confidence in managing their money. Many employees also do not know where to start when seeking financial support; something that 39% of employers identify as a key barrier to improving financial wellbeing.
Jonathan Watts-Lay, Director, WEALTH at work, comments: “Many people don’t realise the financial impact that caring responsibilities can have over time. Whether it’s paying for childcare or reducing working hours to support a family member, these decisions can make it harder to build up savings and plan for the future.
“It’s important to understand what support may be available; not just personally, but through your employer as well. Many workplaces now offer help such as financial education, guidance or benefits that can ease some of this pressure. Taking small steps early, such as reviewing your finances and making the most of available support, can make a real difference.”
