Workforce retention starts with health: Why employers must lead on early inactivity

Ill-health can have a detrimental impact on long-term pension adequacy. Here REBA’s content writer Sarah Haselwood explores how employers can take a leading role in keeping employees connected to retirement savings.

Ill-health is a major, and growing, driver of economic inactivity in the UK.

REBA’s roundtable report, Impact of ill-health and career breaks on pension adequacy, published in partnership with Aviva, focuses on how ill-health directly threatens long-term financial security and pension adequacy by creating disrupted saving patterns.

Rising inactivity

The government’s Keep Britain Working (2025) report identifies a growing crisis as rising inactivity reshapes the UK workforce. Currently, over 1 in 5 working-age adults are economically inactive, with an additional 600,000 individuals projected to leave employment by 2030.

Ill-health directly undermines pension adequacy because standard UK workplace pension schemes rely on linear, uninterrupted career paths. When an individual experiences ill-health, their pension savings may be disrupted due to:

Leaving the workforce: If chronic ill-health forces people out of work entirely, salary-derived pension contributions will stop.
Reduced pay or contribution pauses: Long-term sick leave often results in reduced income, which makes maintaining pension contributions difficult, forcing individuals to pause, reduce, or opt out of contributions.
Costs for carers: Carers UK’s State of Caring 2025 report found that almost a quarter (24%) of unpaid carers report cutting back, pausing, or completely stopping their pension payments due to the financial costs associated with caregiving.
Time away: Work-related mental pressure and burnout are driving employees to take unpaid sabbaticals or career breaks to recover, causing those affected to miss out on vital employer matching contributions.

These challenges are driving home the importance of preventative care, early intervention, and adaptable routes to keep employees connected to work and saving into a pension.

Actions for employers

Employers should focus on educating employees about their pension choices and using pay reviews or bonus periods to prompt additional contributions. An openness to collaboration and shared learning can reflect a wider shift towards collective problem-solving rather than isolated action.

Organisations can also use career-break tools to allow employees to model different scenarios. For example, the financial impact of taking a few months out compared with a multi-year break in terms of changes in contributions, earnings or how working patterns affect their projected retirement income.

For more insights, download REBA’s roundtable report, Impact of ill-health and career breaks on pension adequacy.