Pensions - Articles - Transition out of work could be driven by the need to care


An Office for National Statistics (ONS) analysis of Census 2021 data, published shows that:

 Females had a lower percentage in employment (53.2%) compared with males (61.4%). Males also represented a slightly larger proportion of all those in employment (52%) than females (48%), despite there being fewer males (48.4%) than females (51.6%) in the adult population overall.

 The gap between male and female employment is just 1% between ages 16 and 24. It then increases to almost 10 percentage points for those aged 30 to 34 years and stays around this level until the groups aged 70 years and over. The ONS said the increase could be explained by females leaving work after having children (the average age of a new mother is 30.9 and a new father, 33.7, according to the ONS). Females may also provide higher levels of unpaid care for sick and disabled relatives in these age groups, the ONS added.

 The highest percentage of adults in employment was among 40 to 44 year-olds (80.8%). The ONS said the: “employment percentage then decreased closer to typical retirement age. These trends reflect the ages where people generally transition in and out of the workforce.”

 A recent PensionBee report - The Carer’s Pension Gap report, suggests that the need to take time out of work to provide unpaid care for dependents could affect around two in three of us at some point in our working lives, with a knock-on impact for retirement prospects.

 Becky O’Connor, Director of Public Affairs at PensionBee, commented: “The need to care for loved ones is a key reason people, often women, have to take time out of the workplace. This affects not just their ability to earn, but their ability to save and eventually retire - or not. This is the biggest reason for the gender pension gap.

 “This latest analysis from the ONS strongly indicates that the transition from working to not-working may start much earlier for some people than the age we traditionally perceive as ‘retirement’ age. This could be a result of unforeseen circumstances, including the need to care for others, being more likely to affect the older half of the workforce. This situation can lead to forced early retirement, or forced part-time rather than full-time employment.

 “Understanding what your own work pattern is likely to be through the decades of adult life is key for retirement planning. Many people are at risk of not saving enough because they might assume that they will be in full time work until they reach state pension age, but then this turns out not to be the case. As a result, the amount they are able to save in a pension suffers, often unexpectedly, and circumstances deny them the opportunity to do anything about it.

 “PensionBee has calculated that for every year spent out of work to perform unpaid care, someone’s pension pot at retirement could be roughly £5,000 lower. So someone on an average salary throughout working life, who only takes a year out of work to perform care, could expect a pot size of around £217,000 rather than £222,000, and so on. Going part-time (three days a week) rather than full time, can cost £2,000 of an eventual pension pot, for every year spent part-time rather than full-time.”
  

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