Government should subsidise mothers’ pensions

A think tank has suggested that the government should subsidise the pensions of women who take time out of work to care for children or elderly relatives.

The Social Market Foundation (SMF) has said that society still overwhelmingly expects women to bear most of the burden of looking after children and elderly relatives, meaning that they often end up with lower earnings than men. With increasing lifespans, the think tank is concerned that women’s wealth will fall further behind, unless significant new support for women’s pensions is introduced by the state.

In a report called Gender equality and the 100-year life, the SMF shows that five years after graduation, men’s median wages are £3,600 higher than that of female graduates. Ten years after graduation, this figure rises to £8,400. It also states that women in their late 50s typically have around half the pension savings of men the same age.

The report says that taking time out of the labour market to raise children or care for relatives is one of the key causes of the pension gap. “Addressing the lack of pension accumulation during this period is essential if we are to close — or even narrow — the gap in pension savings between men and women,” argue the report’s authors.

According to 2016 estimates from the ONS, a woman on maternity leave carries out weekly unpaid work with an economic value of £762.75, well above the average regular weekly wage. By applying the current three per cent minimum contribution rates from automatic enrolment pensions schemes to such unpaid work, the SMF says that the government should contribute £22.88 per week, or £1189.89 per year, to a woman’s pension pot.

The SMF says that a more equal distribution of work and care between men and women would help address the wage and pension gap, but many men believe they do not have the option of working part-time in order to provide care. The results of new polling contained in the report reveal that one third of men (33 per cent) believe that their request for flexible working to care for a partner or relative would be turned down, compared to just over a quarter of women (27 per cent) who say the same.

SMF chief economist, Kathryn Petrie, said: “For all the strides we’ve made towards equality, social attitudes that push women to give up work to care for children and parents remain strong. As well as trying to give women and men more flexibility and choices, government policies should do more to help women with the financial implications of taking time out of work.”

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