The financial cost of caring for loved ones

Becky O'Connor

by , Director (VP) Public Affairs

28 June 2023 /  

A women in a wheelchair, on grass, wearing mustard shoes and socks.

Today we’ve published a new report: ‘The Carer’s Pension Gap‘, which highlights the impact of time taken out of work to look after loved ones on the nation’s retirement outlook.

There’s currently an estimated 4.9 million unpaid carers in England and Wales, according to the Office for National Statistics (ONS). Over a working life, our research suggests that the chance any one of us will have to take time out of work to provide unpaid care at some point, is two in three. That’s higher than might be expected.

We tend to think that the need to care affects women more than men. However our recent analysis of previously unpublished ONS data shows that while more unpaid carers are women - the difference between the proportion of women and men who provide care isn’t huge. In England, 10.3% of females are unpaid carers, compared with 7.6% of males. In Wales 12% of females compared with 9% of males provide unpaid care.

The need to provide unpaid care typically arises when someone has children, or when a parent, partner or grandparent falls ill. The birth of children and age-related incapacity are generally more predictable than the misfortune of illness. But these key care moments can be difficult to plan - and the consequences to household finances can be shocking.

Unpaid carers face managing on lower incomes, which makes them more financially vulnerable; they also face more hours of work overall, if you include some hours of paid work on top of care work, as well as physical and emotional strain.

When the need to care for someone close arises, it can be sudden and dramatic, transforming your life and work overnight. You can go from being employed full-time and paying into a pension to unemployed and on benefits, caring night and day for someone you love, in a matter of hours.

There’s a safety net to support people when this happens, but one of the things that unpaid carers might have foregone, which won’t be replaced by the benefits system, is adequate private pension provision.

There’s the possibility of further reform of the State Pension to help solve this issue. In her government-commissioned review of the State Pension age, Baroness Neville-Rolfe refers to policy areas where further work’s needed to support State Pension provision: “One major example is carers where we had evidence both of the contribution this dedicated group make in supporting the ill, disabled and older people, and the difficulties they face. I believe further work is required in this area.”

It’s worth noting that although no new increase in the State Pension was announced following the review, over time, the State Pension age‘s set to increase and, as it does, the probability that someone will need to take more time out of work to care for someone increases alongside the number of years in work.

In light of the research findings and analysis in the Carer’s Pension Gap report, we’re calling for the government to consider the problem of needing to take time out of work to perform care and how it affects the retirement outlook for workers, as it reviews work and pension policies.

Have you or someone you know been affected financially by the need to provide unpaid care? Let us know: press@pensionbee.com.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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