Government should pay into pensions of women who take care of kids or relatives, says think tank

Lily Canter
29 October 2019

The government should contribute towards the pensions of women who stop working to care for children or relatives, according to a think tank


A report by the think tank Social Market Foundation warns of the widening gap between men and women's wealth as life spans increase.

On average women accrue smaller pension contributions than men due to earning lower salaries and taking time out to care for children or elderly relatives.

The SMF Gender equality and the 100-year life report recommends applying the 3% minimum contribution rates from automatic enrolment pensions schemes to a woman on maternity leave. This would equate to a new government contribution of £22.88 per week, or £1189.89 per year, to that woman’s pension pot.

Kathryn Petrie, SMF chief economist says: “Rising life spans are a good thing, but if we don’t have the right policies to respond, they could amplify financial differences between men and women.  

“For all the strides we’ve made towards equality, social attitudes that push women to give up work to care for children and parents remain strong. As well as trying to give women and men more flexibility and choices, government policies should do more to help women with the financial implications of taking time out of work.”

In 2016, the Office for National Statistics estimated that a woman on maternity leave carries out weekly unpaid work with an economic value of £762.75, well above the average weekly wage. 

The SMF report released this week shows that five years after graduation, men’s median wages are £3,600 higher than female graduates’. Ten years after graduation this figure rises to £8,400.

Women in their late 50s typically have around half the pension savings of men the same age.

“Taking time out of the labour market to raise children or care for relatives is one of the key causes of the pension gap. Addressing the lack of pension accumulation during this period is essential if we are to close – or even narrow – the gap in pension savings between men and women,” says the report.

Ian Browne, pensions expert at financial services company Quilter says it is unlikely that the Government can deliver the SMF proposal but there is scope to make the system fairer for those caring for elderly relatives.

 "If you formally register as a carer for someone you can get some benefits and NI credits toward the state pension but it is nowhere near satisfactory. When we eventually get some form of social care policy from the government, it needs to address this issue head on.

"The current system in some ways levies a ‘dementia tax’ on those who are caring for someone with the debilitating condition, and can have an enormous impact on their ability to earn and thus their ability to save for their own later life."

Retirement research body the Pensions Policy Institute reported earlier this year that women in their 60s have an average of £51,100 in their private pension pots while men have £156,500 - over two thirds more.


Why should the taxpayer fund this....

... when there should be a perfectly suitable working spouse/partner, who receives all the benefits of a stay-at-home parent, who should be compelled to pay this, if compelling is indeed what is required. (Of course, if the mother is the one with the job and the partner not, then perhaps the mother could actually go back to work - no point in having them both staying at home.)

The taxpayer receives none of the benefit from this, yet the family concerned gets all of it. It's not as if the taxpayer isn't funding other aspects of their choice to have kids - NHS treatment for the kids, schooling, child benefits, statutory parental leave/pay....

Simplistically, why should I pay even more tax so some bloke can have his wife stay at home and cook his tea, when he should be perfectly positioned to fill in this perceived gap in funding.


In answer to PJH.
Unfortunately everyone has to subsidise the next generation. Whilst those who elect not to have children save the expense of their upbringing, they do rely upon future generations to nurse them when they themselves grow old and indeed continue to run the companies that will fund their pensions, plough the fields that will feed them in their retirement etc. So yes, the taxpayer does benefit from this.
I understand the view of those who have chosen not to have children, indeed without wars to cull the populous it seems the world becomes over populated. Sooner or later, if humanity is to survive, there will have to be some regulation.
However the whole system needs reassessing.
Children need parenting and educating or they will grow up ignorant and steal from those hardworking childless people whilst they are out at work, or worse still whilst they are commuting. If caught they will eventually be jailed and kept at great public expense. Having spent most of their life in jail unable to save and finance their own pension they will once again live off state handouts. AND THERE IS NO STATE, ONLY TAXPAYERS.
It is wrong that two workers can earn £100,000 and keep child benefit when another family with one earner earning £60,000 loses that benefit. It is wrong that the self employed can 'employ' their wives to stay at home as 'secretaries' claiming tax reliefs unavailable to the employed. Just as it wrong that M.P.s are still milking the taxpayer in unimaginable ways.

In reply to by Xrat (not verified)


But I've already listed some of the the wondrous ways in which we already subsidise families in order to have kids.

I baulk merely at yet another call on my wallet to extend this subsidy even further, when there's a working partner of the mother conveniently close by who should be doing this extra funding, should it be - indeed - felt necessary.

Pension contributions for carers

NI credits are given to a wide range of people not just carers (of either sex) including those in training, on jury service, on benefits etc. I tend to agree that as there is a push towards personal pensions through investment rather than the unsustainable state pension payments out of government revenue there should be some type of contribution towards pension pots as well as or perhaps ultimately instead of NI credits. Whilst I recognise that historically women have lost out financially due to taking up the role of rearing children surely in this day and age we should be recognising that traditional gender roles are blurring and apply any policy regardless of sex rather than penalising one gender now to try and correct historic imbalances? Surely that is against equality laws?

You get pension credits

Women can get pension credits for their state pension while bringing up kids, now they want taxpayers to pay for them a second workplace pension which workers & employers have to contribute to for working people, seems like they want everything for free. You have kids by choice so if you don't like the system don't have kids. Many of us never had the option of a employers or workplace pension system so have to live on what we qualified for.


I am a 63 yr old who has worked since I was 15 yrs old, I was widowed at 39 and had three young children and a house to keep. I had my widows pension taken because I was to young although my youngest was young I had to take a job to try and fit in, I had no handout, no benefits of any kind. I was widowed 24yrs before marrying again. I was expecting to retire at 60 because I have poor health however this is not possible because I can't afford to pay the bills. I am a carer in profession and care for my mother and am struggling. My o pinion is that people like me are likely to die at early age and the government won't have to pay much if anything out at all.
I think this is a disgrace how they have treated woman and should have bought the age increase gradually, not a big jump of six years in my case.

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