Motherhood penalty hits women’s savings
Women’s earnings are more than twice as likely to be affected than men’s after having children
Women’s earnings are twice as likely to be affected after having children than men’s, and the shortfall can have a lasting impact on their pension savings.
Evidence of a “motherhood penalty” hitting women’s retirement income has been revealed in new research by The People’s Pension.
The survey has found that women struggle to pay into a pension while they are coping with a drop in household income as they raise young children.
The poll of more than 2,400 people across the UK, conducted by YouGov, found that since having children 43 per cent of women reduced their working hours. This was compared to nine per cent of men.
The People’s Pension is calling on the next Government to accept the principle that caring is an economic activity that should attract workplace pension contributions and address the crippling costs of childcare through better funding.
The organisation is a not-for-profit, multi-employer pension scheme, with more than 4.7 million members from 90,000 employers.
Its survey found that a third of women (31 per cent) stopped working for a period after starting a family, compared with just 4 per cent of men. Only a quarter of women (24 per cent) said that their pay hadn’t been adversely affected compared as a result. This contrasted with 63 per cent of men saying that their pay had been unaffected by parenthood.
The People’s Pension said it was “unrealistic” to expect women who are experiencing a significant drop in their household income while they care to, at the same time, pay more into their pension.
After having children, 20 per cent of women stopped or decreased their pension savings.
Gregg McClymont, director of policy at The People’s Pension, said women’s working lives, were dramatically affected after having children, causing a knock-on effect on their current and future finances.
“Voluntary additional pensions provision is unrealistic for most women at a time when household finances are especially stretched,” he said. “But without those pension contributions many women’s pension pots fall behind men’s and never recover the lost ground. That’s why we’re calling on the next government to accept that raising a family is an economic activity that deserves workplace pension contributions and to address the cripplingly high costs of childcare in the UK.”
The survey also found that the majority of workers are ill-prepared for retirement, as nearly two thirds of people (64 per cent) don’t think they’re saving enough.
To afford life in retirement, six in 10 people (61 per cent) intend to rely on a private or workplace pension; a third of people will carry on working part-time (33 per cent) or use their savings (35 per cent); two in 10 people (21 per cent) are reliant on their partner’s pension while others are depending on inheritance (18 per cent), downsizing their home (17 per cent), or winning the lottery (five per cent).
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