New data shows 2.8 million full-time workers are in problem debt. Here's what pension schemes need to know.
Recent data from StepChange Debt Charity paints a concerning picture: having a job is no longer a shield against debt problems.
Full-time workers seeking debt advice increased by 16% since 2021
StepChange’s report ‘In work. But still in debt’ (2024) reveals a troubling trend. The proportion of their clients in full-time work rose from 38% in 2021 to 44% by the end of 2023 – a 16% increase in just two years.
This means 74,428 people with full-time jobs needed debt advice last year. And they’re just the ones who asked for help.
The wider picture is even more concerning:
- About 2.8 million UK adults in full-time employment (roughly 9% of all adults) are in problem debt
- An estimated 11 million full-time workers (35%) show at least one sign of financial difficulty
Cost-of-living crisis is main cause of debt
For many, the numbers simply don’t add up. StepChange found that 1 in 5 full-time workers who sought help couldn’t make ends meet – their essential spending exceeds their income, even after budgeting and debt advice.
The cost-of-living crisis is the main culprit:
- 26% of full-time employed clients say increased living costs are the main reason they fell into debt
- 10% say covering day-to-day expenses like food and bills caused their debt
- 82% of full-time workers with financial difficulties blame the rising cost of living
Other factors compound these struggles:
- 9% of working clients were receiving Universal Credit despite full-time employment
- Women’s average monthly income is £133 lower than men’s, even among those in full-time work
5 ways pension schemes can help balance debt and saving
These statistics have important implications for how pension schemes communicate with members:
- Remember that full-time employment doesn’t equal financial stability. Many of your members may be balancing debt repayments alongside pension contributions.
- Acknowledge current pressures when discussing long-term saving. The good news is that 80% of StepChange’s working clients have a positive budget after debt advice, suggesting that with the right support, they can manage both immediate needs and future security.
- Consider providing information about financial wellbeing resources. Simple signposting to services like StepChange could make a significant difference.
- Be clear about hardship options. Make sure members know what flexibility exists within the scheme if they face financial difficulties.
- Use plain language to discuss financial matters. When people are stressed about money, complex pension terminology creates an additional barrier.
Creating communications that acknowledge financial pressures
The current economic climate means many scheme members are facing unprecedented financial pressure. By recognising these challenges and communicating with empathy and clarity, pension schemes can help members navigate both their immediate financial needs and their long-term security.
Effective communications should:
- acknowledge members’ current financial realities
- explain the value of pension saving even during difficult times
- connect members with appropriate support resources
- use clear language that builds financial confidence
All statistics from StepChange Debt Charity’s “In work. But still in debt” report (2024). Visit stepchange.org for more information.
