‘£2K new parent injection could address gender pension gap’

A new report from Which? calls for a cash injection to be paid to new parents who are primary carers and suffer a pension penalty as a result of taking time off to look after children or work part time.

Glass jar labelled pension with some coins in it


New parents who take time out to care for a child and work part time should be given a £2,000 pension top-up to address the pension gap that results, according to a new report from Which?.

Which? analysis, conducted with the Pensions Policy Institute, shows women who take time off to care for a child and work part time are likely to be hit by a ‘motherhood pension penalty’, potentially saving £15,000 less towards retirement compared to the average full-time working woman.

Which? found the average male worker was likely to save around 27 per cent more than their female counterpart. That gap increases to 40 per cent for women who are still the most likely to be primary carers and to take time off to care for a child and work part time.

It is calling for new mums to receive a £2,000 ‘New Parent’ cash injection to address the pension gender gap.

Last year, Which? analysis also found significant disparities persist within state pension benefits – with the average man receiving £153.86 a week and the average woman receiving £125.98 a week, amounting to almost £29,000 more over the course of a 20-year long retirement. This is despite the introduction of National Insurance credits that ensure those with caring responsibilities can still be eligible for state pension benefits.

Similar provisions are not in place for workplace pensions, and so Which? says a £2,000 ‘New Parent’ contribution plus growth would help to offset some of the loss suffered by women who work part-time hours due to being the primary carers and don’t pay as much in NI contributions.

Each household would be able to choose which parent or guardian’s pension scheme the contribution is made to. In the event no scheme is nominated, the contribution would be made to an account with NEST, the auto-enrolment pension scheme set up by the government.

While Which? says the ‘New Parent’ contribution will go some way to address the pension gender gap, Which? believes a boost is needed to the minimum pension contribution for middle earners to ensure future pensioners have enough money to live on. It is recommending the government raise the minimum pension contribution from eight per cent to at least 12 per cent for middle-income earners. The average earner saving 12 per cent towards retirement could boost their pension pot by £50,000.

However, Which? it recognises that this would be hard for those on the lowest incomes so it proposes the default eight per cent contribution remains for them while others can choose to opt-down to this lower rate.

*Meanwhile, the first  SDG Gender Index, developed by the Equal Measures 2030 partnership, puts the UK 17th in the world for gender equality. Denmark is top. Women’s underrepresentation in parliament, the gender pay gap and gender-based violence were areas where all countries needed to make improvements.


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