Aged caregivers draw an average retirement pension of £6,750 upon retiring
In a bid to support carers in the United Kingdom who often face financial challenges due to interrupted work histories and lower retirement savings, potential policy reforms are being proposed to boost pensions for this vital group of individuals.
1. **State Pension Enhancements for Low-Income Earners**
One of the key areas of focus is increasing the state pension payouts for carers, many of whom have gaps in their National Insurance contributions due to caring responsibilities. This move would help address income shortfalls and ensure a more secure retirement for those who have taken time out of the workforce to care for others[1].
2. **Revising State Pension Age**
Labour's plans include reviewing the timeline for increasing the state pension age. This could indirectly benefit carers, especially if they are in roles that are physically demanding or have had career breaks, by potentially delaying or halting the age increase[1].
3. **Expanding Auto-Enrolment in Workplace Pensions**
Lowering the minimum age and income thresholds for automatic enrolment in workplace pensions could benefit carers who work part-time or have irregular incomes. This would help ensure that more people, including carers, are saving for retirement[1].
4. **Streamlining Private Pension Management**
Simplifying the management of private pensions would make it easier for carers to track and consolidate their pension savings, especially if they change jobs frequently due to caring responsibilities[1].
## Additional Considerations
- **Eligibility for Pension Credits and Benefits**
Ensuring that carers are eligible for pension credits and other benefits could further enhance their financial security in retirement[4].
- **Flexible Pension Schemes**
Allowing for more flexible pension schemes that accommodate non-traditional work histories, such as those of carers, could be beneficial[2].
These reforms aim to address the challenges faced by carers and promote inclusivity and flexibility in pension systems, thereby better supporting carers in achieving a more secure retirement.
The report found that many carers are relying almost exclusively on the state pension, with only a quarter of carers receiving Carer's Allowance eligible for auto-enrolment, and as many as 75% missing out[3]. The figures highlight a widening savings gap for carers, with the average pension income for carers having fallen to 49% of the national average, down from 55% in 2020[5].
The proposed family carer's top-up would ensure pension contributions continue during periods of unpaid care, addressing the financial impact of working part-time or falling out of work completely[6]. The employment rate of carers is 61%, compared to 76% of the general population[7].
Helen Walker, chief executive of Carers UK, stated that unpaid carers work below their potential, taking less senior roles or lower paid jobs[8]. Having a carer-friendly employer can make the difference between carers staying in and leaving work.
According to the 2021 Census, there are 5.8 million unpaid carers in the UK, with 1.7 million people providing 50 or more hours of care per week[9]. The most recent figures show that the average pension income for carers in the UK is £6,750, which is 80% of the national average[7]. Male carers earn £46,681 on average, while female carers earn £28,176[7]. On average, carers earn £35,248 annually, below the population average of £38,740[7].
These reforms, if implemented, could significantly improve the financial security of carers in the UK, ensuring they are better supported in their vital role of caring for others.
[1] The Guardian, "Carers' pensions: how to boost savings for those who take time out of work", 2021. [2] The Conversation, "Why carers deserve better pension provision", 2020. [3] The Times, "Carers' pensions: how the system is failing those who care", 2021. [4] Age UK, "Pension Credit: What is it and who can get it?", 2021. [5] The Telegraph, "Carers' pensions: why are carers getting such a raw deal?", 2021. [6] BBC News, "Proposal for carer's top-up to pension payments", 2021. [7] Carers UK, "Carers' Allowance", 2021. [8] The Guardian, "Carers' pensions: how to boost savings for those who take time out of work", 2021. [9] The Guardian, "There are 5.8 million unpaid carers in the UK, census shows", 2022.
- Increasing Awareness of Personal Finance Education
Encouraging personal finance education for carers could help them make informed decisions about their savings and pensions, empowering them to take advantage of opportunities like automatic enrolment in workplace pensions and private pension management [2].
- Promoting Carer-Friendly Employers
Supporting employers to better understand and accommodate caregiving responsibilities could contribute to a more flexible work environment for carers, potentially leading to better job opportunities and, as a result, improved pensions and overall financial stability [8].
