New data suggests improved parental leave policies will help you financially later in life.
Pensions can often seem like the area of personal finance lowest on your to-do list. And it can seem even less connected to a fully-functioning shared parental leave scheme.
But new research by PensionBee shows that were all employers to offer gender-inclusive parental leave, as well as properly addressing the current gender pay gap of 16% (Office of National Statistics, 2020), it would have significant impact on our retirement savings.
In fact, if men did the same average amount of unpaid care work as women, the latter could increase their pension pots by £106,000 if they returned to work full-time. In other words, if women worked equal hours to men at equal pay and both parents took equal leave for childcare responsibilities, a woman could increase her pension by 35%.
While men’s pots would be reduced, a couple would earn more than £70,000 more in extra pension savings. That’s a 10% increase.
However, the lack of generous shared parental leave schemes and the continued low uptake is currently contributing to the U.K.’s gender pension gap, measured by PensionBee as being 38%.
And don’t forget to add the high cost of childcare – the average weekly cost of sending a child under two to nursery is currently £263 – which keeps people (let’s face it, mostly women) out of full-time work.
All this shows that on top of the wellbeing benefits of shared parental leave, there are clear long-term financial benefits too.
This is particularly true when family dynamics are a little more complex, as Pete Moores (pictured above), a self-employed innovation consultant and divorced dad, explains.
Vaguely. I am aware that working mothers miss out on employer contributions for the time they are on maternity leave and as they (typically) retire earlier, their overall pot can often be lower, despite women generally living longer than men!
I’m a divorced Dad and my ex-wife has all the capital assets from the marriage. Pensions are therefore more important for me than they are for her, as she has a property portfolio to provide for her.
Since Oct 2020 I am a self-employed innovation consultant, I help applied science companies with growth planning and securing funding. My previous employers have been quite accommodating of the fixed schedule of contact with my children, allowing me to schedule overseas trips around my responsibilities to my children.
Working from home was always an option if/when the children were unwell. As I am now self-employed, my schedule is flexible, so I can structure work around my family commitments (parent’s evening, healthcare appointments, sporting events etc.).
At the time of having our (twin) children, the policy of my employer was to provide fathers with a total of four days of paid leave. My ex-wife’s employer, provided (if I recall correctly) a full year of maternity benefits (full pay for 6m, 50% pay for 6 months), contingent on her return to work.
At the time of having children we both were working full-time and the way the maternity/paternity benefits were structured at the time felt like there was no other option but for her to take the time off and me to continue to work. This caused me a lot of stress as our children were pre-term (as twins often are), so spent 5 weeks in the NICU, during which I tried to keeping working, support my wife, visit the children and keep the home going.