Ian Futcher, financial planner at Quilter comments on the the Family Resources Survey:
The latest Family Resources Survey reveals that employment and self-employment income made up 74p of every £1 in household income in 2022/23. While earnings remain the backbone of household finances, they often fall short of covering real-world expenses. Alarmingly, 20% of families have no savings, and a further 28% have less than £1,500, highlighting the precarious financial cushion many rely on.
With such slim margins, even a small, unexpected expense can throw a household into difficulty. This data underscores the importance of better financial education and improved access to various forms of financial guidance and advice to help people build resilience, especially in the face of economic uncertainty.
Carers
Eight in every 100 people in the UK are now providing informal care, with 10% of these supporting more than one person. Five in every 100 receive care each week, and 42% of those receive care continuously. This paints a picture of a country increasingly reliant on unpaid family care. While caring may be a moral or emotional requirement for many, the financial impact can be significant, particularly for those who reduce working hours or leave employment to provide care.
Without support, many carers could face long-term losses in income, savings, and pension provision. One underused but vital mechanism is Carer’s Credit, a National Insurance credit that helps protect an individual’s state pension entitlement when they step away from paid employment to provide care. Despite its importance, take-up remains low, with tens of thousands of eligible carers missing out each year due to lack of awareness. Improving awareness and access to Carer’s Credit could make a meaningful difference to many people’s future financial security.
Pension participation
Pension participation among employees remained high in 2022/23, with 79% of eligible employees actively contributing. While the broader trend since the introduction of auto-enrolment in 2012 has been successful, it is flattening raising important questions about whether the policy is beginning to stall.
As inflation continues to erode take-home pay, more workers are prioritising short-term financial survival over long-term savings, with some opting out of pensions altogether. The time may be ripe to revisit the structure of auto-enrolment. Extending coverage to younger workers and those earning below the current earnings threshold could help bolster long-term retirement security. However, political and fiscal challenges remain. The Chancellor’s decision to increase employer National Insurance contributions as part of a broader revenue-raising strategy complicates the introduction of further pension reforms that would place additional financial pressure on businesses.
Balancing the need to strengthen retirement outcomes while supporting employers and managing the public purse will be one of the key policy tests in the coming years.
Savings and investment
The survey paints a worrying picture of household saving and investment habits. A significant 20% of families have no savings at all. A further 10% had less than £100 in savings and 18% had between £100 and £1,500 in savings. This divide suggests a growing disparity between those with the means to build financial buffers and those living month to month.
Encouraging regular saving, however small, remains a key priority, particularly when paired with financial education that helps people understand the long-term benefits of compound growth, tax-efficient investing, and emergency funds. Embedding this education from a young age is vital. Giving children and young adults the tools to understand and manage money early on can help foster stronger financial resilience throughout their lives.
However, it’s important to recognise that for many people, saving simply isn’t possible right now. Incomes stretched thin by rising living costs mean some households are doing all they can just to stay afloat. Financial education can’t replace systemic support, but it can empower people to make the most of what they do have and help prevent those living on the edge from slipping further behind.
