Why financial resilience matters for a stronger, more productive workforce

Financial resilience is increasingly a core workforce concern with implications for productivity, engagement and long-term business performance.

Royal London’s Financial Resilience Report shows that while some households are beginning to recover from the cost-of-living crisis, the overall picture remains fragile - and for employers, that should be a concern.

According to Royal London’s Financial Resilience Barometer, UK financial resilience stands at just 33%, meaning many adults are ‘economically exposed’ and vulnerable to financial shocks and rising costs. That matters because it tells us a large proportion of working-age adults aren’t in crisis, but neither are they financially secure. They’re coping for now but remain vulnerable to financial shocks - and that vulnerability is increasingly showing up in the workplace.

A workforce under pressure

The headline figures should give employers pause for thought:

30% of UK adults are financially fragile, with low savings and limited ability to cope with unexpected costs.
More than a third (35%) of employees fall into this financially fragile group, highlighting that employment alone is not a safeguard against financial vulnerability.
Even among those in work, many are just one difficult life event away from financial difficulty, with resilience dropping sharply after events such as illness, redundancy or bereavement.

For employers, this is the key point. Financial resilience isn’t simply a personal finance issue sitting outside the workplace. It’s increasingly shaping how people feel, perform and plan for the future while they’re in work.

Financial stress is impacting productivity

The relationship between financial resilience and workforce outcomes is now difficult to ignore.

Only 19% of adults say they could cover bills for one month or less if they were unable to work, according to YouGov, demonstrating minimal financial buffers.
7% of employees have taken time off work due to financial stress in the past year, according to YouGov, with those individuals typically sitting close to the most vulnerable groups.

Time off work is only part of the picture. Behind it sits wider issues - distraction, anxiety, reduced confidence and lower day-to-day focus. When employees are worrying about whether they can absorb an unexpected bill or cope with a period of illness, that strain doesn’t stay at home. It follows them into the workplace.

That creates a clear business risk - lower productivity, higher absence, weaker engagement and greater pressure on retention. In a competitive labour market, employers can’t afford to treat financial resilience as separate from workforce resilience.

The underlying problem

The deeper issue is that financial vulnerability is being driven by weak short-term financial buffers and growing gender inequality in longer-term security.

Financially fragile adults have just over £1,100 in savings on average, compared to nearly £20,000 average across all UK adults.
Monthly discretionary income is just under £80 on average for this group, versus over £1,000 for the most resilient.
Financial resilience is built over time through stronger financial buffers, higher pension engagement and growing confidence - but for many, progress remains slow.

Just as importantly, the report shows that financial vulnerability isn’t confined to one part of the workforce. It’s visible across all income bands and life stages. In other words, this isn’t simply an issue for lower earners. Many employees who appear financially comfortable on paper may still lack the resilience to withstand a shock.

That has important implications for employer strategy. Employers need a clearer understanding of where pressure is showing up in their workforce, which groups are most exposed and what support is most likely to make a meaningful difference.

Why employers should act

There’s now a strong strategic case for employers to take action to help their employees to build their financial resilience.

At the most basic level, a workforce that is more financially secure is better placed to perform consistently. People who feel more in control of their finances are more likely to be engaged, focused and able to make longer-term decisions with confidence.

But there’s also a more practical reason for employers to act. They already have some of the most effective channels available - workplace pensions, benefits, internal communications and trusted points of engagement across the employee journey. Used well, these can help employees build both short-term resilience and longer-term financial security.

Expectations are changing too. Increasingly, employees want more from their employer than pay alone. They’re looking for support that helps them navigate financial pressure, make better decisions and feel more confident about the future. Employers that respond well to that shift are likely to be better placed to attract and retain talent.

Practical actions that can make a difference

For employers, the question isn’t whether they can solve every aspect of financial pressure. They can’t. The more useful question is where they can have the greatest influence.

There are five areas where employers can make a meaningful difference:

Strengthen financial education and engagement: Many employees lack confidence in managing money and planning for the future. Clear, simple and timely communications - particularly around pensions and savings - can help bridge this gap.
Focus on short-term resilience as well as long-term saving: While pensions remain critical, employees struggling day-to-day may disengage from long-term saving. Supporting cash savings habits and financial planning can help build stability and improve engagement with pensions over time.
Target support at key moments: Financial vulnerability increases after difficult life events such as illness, job changes or family disruption. Employers can provide targeted and thoughtful guidance and support during these moments to prevent employees slipping into financial difficulty.
Make support easy to access: Low usage of financial planning tools shows that many employees don’t actively seek help. Embedding support into existing workplace channels can improve engagement.
Work with advisers and partners: Advisers can play a crucial role in helping employers navigate the growing range of financial resilience solutions and ensure support is tailored to workforce needs.