How does caring for someone you love impact your pension?

Taking on caring responsibilities is part of real life for many in the UK

The journey to and through retirement is rarely straight-forward, and taking on caring responsibilities is part of real life for many in the UK. For some, it might involve helping a friend or family member cope with symptoms of a mental illness. For others, it could mean assisting a frail loved one with tasks like bathing or making meals.

Caring can be emotional, unexpected, and rewarding. However, it can also have short and long-term challenges, with lots of carers seeing an impact on their retirement savings.

What are some of the challenges that carers face?

Juggling caring responsibilities with work commitments is often difficult. Many carers have to leave or cut down on work, which can have a knock-on impact on their retirement savings. People who care for loved ones typically retire with less private pension income than the UK average.

A recent Carers UK report, supported by Standard Life, found that:

• 47% of working carers are considering reducing their working hours or giving up work
• 21% of working carers said they had taken on a lower paid or more junior role that fitted better with caring
• 71% of carers who had given up work said they’d felt stressed or anxious about caring when they were in employment

So it’s important to help carers stay in work, as this can make it easier for them to continue saving for their long-term future.

Remaining in work can also help carers stay on track to receive the full State Pension, as it can prevent gaps in their National Insurance record.

A real-life story from one of our colleagues

For Olga Drewnowska, a member of Standard Life’s UX design team, our flexible working policy made a difficult time a little bit easier when her sister was diagnosed with breast cancer:

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Who’s most impacted by caring responsibilities?

Anyone can take on unpaid caring responsibilities at any time and caring responsibilities can vary with age. According to the 2021 Census, people in their 50s and 60s are the most likely to be carers, which is a time of life when people may be thinking more about their retirement finances. And the data shows that this is also an issue that affects women more than men. That's due to the fact that women are more likely to reduce their working hours to care for someone, and be in low-paid or precarious sectors, according to Carers UK’s ‘tipping point’ report.

This contributes to the ‘gender pension gap’, where women retire with smaller pension pots on average than men do. 

What employment-related support is there for carers?

The Carer’s Leave Act means employees are entitled to one week’s unpaid leave per year to provide care. This is available from day one in a new job and can be taken flexibly.

The Flexible Working Act, meanwhile, gives all employees the legal right to request flexible working from their first day in a job. 

This is a great start, but more can and must be done.

At Standard Life, we understand the issues that affect our employees throughout their working life, so we support those who are caring for loved ones by offering all employees flexible working, the ability to make up time taken off work, emergency leave, and – crucially – paid carer’s leave.

What other help could be useful to carers? 

Access to financial education can help carers understand the impact of stopping or reducing work on their long-term savings – and what they might be able to do to improve their financial position.

Employers could consider setting up carers networks in workplaces to connect working carers and give them a space to share their stories with people who relate to their experience – helping them feel heard and understood. Additional training could also help line managers better support colleagues with caring responsibilities. 

Caring for Carers

At Standard Life, we have our ‘Caring for Carers’ initiative. Through this programme, we aim to create long-lasting change for carers both within our workforce and beyond it. We work in partnership with national charities to drive systemic change and deliver local programmes that provide direct, tailored support to carers.

Here are some of the things we’ve achieved:

• In partnership with Carers Trust, we launched an employability programme with Camden Carers to support those who have taken time off work for caring responsibilities to return to employment. 
• We prompted a 57% increase in the number of colleagues recognising themselves as carers – which could, in turn, result in more people getting the right support.
• We have consistently campaigned for the government to legislate for paid carer’s leave, leading to the government recently launching a consultation on employment rights for unpaid carers.
• We’ve developed a huge body of research, experience and expertise so that we can advocate for paid carer’s leave during this consultation phase.
• We teamed up with Carers UK to help launch the UK’s first-ever Power of Attorney Day, helping people better prepare for the unexpected.

Find out more

For more information about how care, employment and retirement interact, read ‘Balancing care, work and retirement in an ageing society’ by the Standard Life Centre for the Future of Retirement.