Today marks the start of Carers Week which is a chance for us to acknowledge the extraordinary work and support that ordinary people do in order to help the people who need care the most in the UK. According to the charity, Carers UK, there are over 10m carers in the UK who provide informal care for another individual, which equates to 1 in 5 individuals.
Every day, another 6,000 people take on caring responsibilities – the equivalent of 2m people each year – which means caring duties will end up touching the lives of many people.
By providing this care, in some cases for more than 50 hours each week, this army of informal carers contribute a staggering £445 million to the economy every day – that’s £162 billion per year*.
Carers earn less, and save less
Our ongoing research with the Pensions Policy Institute on the UK’s most under-pensioned groups reveals that this under-the-radar workforce not only earn less than the average, primarily because they don’t have time for paid employment, their ability to save for their retirement is also severely limited.
About half are in work (compared with three quarters of the rest of the population) and they earn between 16% and 20% less than the UK average, depending on their gender and work patterns.
Pension shortfall
With the current cost of living crisis, carers are facing unprecedented pressure on their finances: a quarter of carers (25%) are cutting back on essentials like food or hearing and 63% are extremely worried about managing their monthly costs). **
Many carers miss out on the benefit of a workplace pension with their employer with a staggering 81% of carers locked out of auto enrolment completely because they earn less than £10,000 a year – one of the qualifying criteria for workplace pension eligibility.
Consequently, most carers will reach retirement age with private pension wealth of £29,800 – just 37% of the UK average of £80,690.
According to the 2021 Census, 59% of unpaid carers are women and women are more likely to become carers and to provide more hours of unpaid care than men.
Helen Walker, Chief Executive of the Carers UK charity said: “Many of us don’t expect to become an unpaid carer, but the reality is that two or three of us will care in our lifetime.
“We have growing evidence about the challenges faced by unpaid carers around work, finances and their health and wellbeing. Carers often have to give up work to provide care when juggling both becomes impossible, turn down promotion and face extra costs as a result of caring. It affects their finances in the short and the longer term. It’s imperative that carers are provided with opportunities to build up pensions in later life.”
Could a ‘family carer top-up’ be the answer?
Introducing a family carer top-up would help about 3 million women and 300,000 men top up their pension savings after taking time out of work to care for children and elderly relatives.
The top-up would be worth about £820 per year and boost pension outcomes by about 20% for people who take 10 years out of work due to caring responsibilities before returning to the workforce full-time.
A struggle to juggle work and caring
Jenny Jeffery is a part-time worker and a carer for her husband. She thinks a top-up would be a big help. She said: “I’m not surprised to see that carer’s pension wealth is so small compared to the average as most carers are continuing to struggle with juggling work and caring.
“More needs to be done to ensure carers get better support as a whole, let alone allow them to even think about something such as their pensions. If carers were better supported, including the receipt of Paid Carers Leave which would give them better financial support, they may be able to think about saving for their pension.”
How could we help carers catch-up with pension saving
As well as the top-up, we’re also calling on the government to make other key policy changes to help bring millions more people into pension saving. Two of these policies would help carers:
- Removing the £10,000 qualifying earnings trigger would get hundreds of thousands more people saving through auto enrolment in a workplace pension.
- Pension saving from the first £1 could increase pension wealth by nearly 40%
These simple steps could help carers catch up on pension saving and secure a fairer financial future. Find out more about our campaign for fair pensions for all and in the underpensioned index 2022 report.
* Petrillo and Bennett, 2023
**Carers UK, State of Caring 2022
