The research found that two out of three people are likely to take time out to provide unpaid care at some point during their working life, and that this impacts their retirement savings.

The Carer’s Pension Gap report identifies key moments when people are most likely to need to take time out of work to provide care.

These are taking care of children (48%), looking after parents (30%), a partner (21%), and grandparents (15%). Only 5% of those questioned reported having to look after grandchildren, although this rises to 19% of carers aged between 55 and 64.

PensionBee estimates that for every year spent out of work to perform unpaid care, a pension pot is roughly £5,000 lower at retirement, while for every year spent working part-time (three days a week), the pension pot is typically £2,000 lower.

A higher proportion of female carers said that looking after their children was the reason for having taken time out of work, while male carers were more likely to look after their parents or partner.

The carer’s pension gap

For someone who needs to provide unpaid care at all five key life moments, PensionBee estimates their pension pot could be almost £30,000 less than average at retirement.

This carer’s pension gap is the difference between a typical pot size of £222,000 at age 67 and one worth £193,000 at the same age. This assumes two years out of paid work to look after children, plus an extra year each (four in total) for caring for grandparents, parents, grandchildren and a partner.

How much someone has in their personal pension pot affects their income in retirement. PensionBee calculated that after taking a 25% tax-free lump sum, someone with a pension pot of £222,000 would have a retirement income of £12,222 a year while someone with the smaller pot of £193,000 would have an annual income of £10,582.

When you add the State Pension, someone who has taken time out of work to care can expect an annual income of approximately £20,000, a figure which falls slightly short of the £23,000 the Pensions and Lifetime Savings Association recommends for a moderate standard of living in retirement.

A nation of carers

Becky O’Connor, director of public affairs at PensionBee, said: “We are a nation of carers. Millions of workers; both male and female, old and young, are filling the gaps created by a lack of social care support, at great personal cost. The chance of this affecting any one of us throughout our working lives is high. The consequences go beyond pensions and security in later life, affecting people’s careers, personal lives, and also the UK economy.

“It’s not a niche problem  – nor is it necessarily gendered  – although currently, women are more likely to face the consequences of the biggest gap: the childcare gap. Besides the pension gap caused by childcare, it’s clear there is a strong case to give attention to the impact of the multiple care moments faced by people in their late fifties and early sixties.

“As the Government looks to address the labour shortage, particularly among older people who have left the workforce early, it’s imperative to find a solution that prevents people from missing out on key working years to avoid a pension shortfall in retirement.”

Government and employers urged to do more to help

Kate Smith, head of pensions at Aegon, said: “Lengthy gaps out of the workplace can have a devastating impact not only on people’s incomes, but also on their ability to save in a pension and ultimately their future. In their early 50s, people may be on track for the retirement income they aspire too, when suddenly, out of the blue, their situation changes when a loved becomes sick, forcing them to take time out of work.

“The government provides some support via national insurance credits, where benefits are claimed, to protect their State Pension. However, there is scope for government investigating what additional support for carers might be available.

“Employers could also do more here. A flexible workplace could help carers to stay in work longer, but possibly with shorter hours. And employers could provide paid carer’s leave and maintain their pension contributions for a limited time. It’s vital that workplaces adapt to the demands of an ageing population, providing flexibility and support.”