Let's talk about how unpaid care is affecting people’s pensions

Did you know the value of unpaid care in England and Wales is roughly equivalent to having a second NHS?

The sheer scale of the impact that unpaid carers have on the UK economy has to be seen to be believed:

12,000 – the number of people that become unpaid carers every week.
5.7 million – the number of unpaid carers across the UK.
£162 billion – the value of care provided by unpaid carers every year, which is roughly equivalent to the entire NHS budget for England.

Unpaid carers are vital to the health and social care systems in this country, but the personal cost of providing care for loved ones is having a detrimental effect on people’s finances and their ability to adequately save for retirement.

Juggling work and care

Caring for a loved one is incredibly rewarding, but it isn’t always easy. Particularly when it comes to trying to find a balance between the responsibilities that come with unpaid care and work. According to Carers UK, there are 2.5 million unpaid carers currently in employment, and 75% of them are worried about continuing to juggle work with their caring responsibilities.

The result of this is that many people have to reduce their working hours, switch to part-time employment, or leave the job market altogether. In fact, as many as 600 people every day make the difficult decision to leave work to provide unpaid care.

Unpaid care is often unexpected

Suddenly finding yourself needing to provide care for a loved one can happen to anyone at any time. You may have a friend or family member with a condition that gradually worsens over several years, and slowly requires more of your time. But with an accident or shock diagnosis, you can find yourself needing to step into the role of unpaid carer overnight.

Meet Olga

This is precisely what happened to Olga Drewnowska, a member of our UX Design team, when her sister was diagnosed with breast cancer. It goes without saying that it was an extremely hard time for both Olga and her sister. But it would have been made all the more difficult if she hadn’t been able to take advantage of a flexible working policy like Phoenix Flex.

Phoenix Flex helped because it allowed me to relocate to another city within the UK to look after my sister. I didn’t have to make a choice between my family versus a role I loved. It made me feel heard, and it made me feel valued. Having the option to deal with life as it comes is so helpful.

At some point in their lives, around two-thirds of people will provide care to a loved one, making it vital for employers to consider how best to support them. Initiatives such as flexible working are crucial for helping people with caring responsibilities to stay in work for longer, when otherwise they may be forced to leave employment altogether.

The Gender Care Gap

Data shows that this is an issue that disproportionately affects women more than men. According to the Census 2021, women account for 59% of unpaid carers, and research from Carers UK shows they are also more likely to provide more hours of unpaid care than men at ages when they would expect to be in paid work.

The extra demand that unpaid care has on women’s time means they often feel they have to reduce their working hours, which limits their earning potential, and therefore also their saving potential.

In a piece of research by Timewise that we supported, we looked at how people view and experience flexible working, and one of the issues that was highlighted was the gender disparity when it comes to taking on caring responsibilities.

We found that part-time work is especially prevalent among women, with 38% of female employees working part-time versus just 14% of men. Of those women, the most cited reason for reducing their hours was to manage caring responsibilities (32% rising to 45% among women aged 35-49), whereas for men it was to better manage their mental and physical health (25%).

0%

Of female employees work part-time*

0%

Of men work part-time*

0%

Of unpaid carers are women**

0%

Of unpaid carers said they were extremely worried about managing their money***

What this means for women’s pensions

We already know that the gender pay gap disadvantages women both in the immediate and long term. But our research found that this disparity is made worse by typical events that happen over the course of a woman’s life, such as the disproportionate provision of unpaid care, which makes it more difficult for them to save for the future.

Reducing working hours and taking breaks from employment altogether reduce women’s overall earning potential, as well as the potential for taking full advantage of employer contributions. The ultimate result of all this is that women’s pension incomes are on average 40% less than men’s.

The immediate impact and long-term financial implications that gender inequality in pay, approaches to flexible working, and responsibilities such as unpaid care can have are vast. More must be done to level the playing field and provide people with the support they need.

Supporting unpaid carers is vital

Roughly a quarter (23%) of unpaid carers said they needed better support to return to or maintain paid work. And with the rising cost of living, nearly two-thirds (63%) of unpaid carers said they were extremely worried about managing their monthly costs.

It is vital to help those with caring responsibilities feel supported and informed about all their options so they’re better able to stay in employment and continue saving for their own futures. This is an issue close to the heart of Phoenix Group CEO and UK Government Business Champion for Ageing Society and Older Workers, Andy Briggs.

Carers provide an invaluable service not just to loved ones, but also to our society and our economy, saving the NHS as much as £445 million every day. They also bring valuable skills and experience into the workplace. It is therefore absolutely vital that people are able to both undertake their essential caring responsibilities and continue to contribute fully at work.

What support is currently available?

An update to the Carer’s Leave Act came into effect in the UK on 6th April 2024, which means that employees are entitled to one week’s unpaid leave per year in order to provide care. This is available from day one in a new job and can be taken flexibly.

On the same day, there was also an update to the Flexible Working Bill, giving all employees the legal right to request flexible working from their first day in a job. This is a great start, but more can and must be done.

For example, at Phoenix Group, we support working carers by offering all employees flexible working, the ability to make up time taken off work, emergency leave, and crucially, paid carers leave.

At Phoenix Group we operate a policy of 10 days paid carers leave, and I would urge all employers who can to act now and introduce a paid carers leave policy. For both carers and the cared for, government and businesses must prioritise support for carers without delay.

With greater, more meaningful support from the state and employers, more unpaid carers will be able to continue working and saving for their retirements for longer.

For more information about all the ways we support our colleagues, head to our Careers hub.

And for more information, advice, and support for unpaid carers, head to the Carers UK website.

Resources