Menu
Save, make, understand money

News

Parents of disabled children ‘face pension poverty’ with £138,000 retirement loss

Parents of disabled children ‘face pension poverty’ with £138,000 retirement loss
Matt Browning
Written By:
Matt Browning
Posted:
25/06/2024
Updated:
25/06/2024

Parents of disabled children could lose up to £138,000 in retirement if they can't work due to their caring responsibilities, a pension provider finds.

Even when those parents return to work on a part-time basis, they could still be £89,000 worse off compared to those who stay in work full-time.

Taking a career break, while lessening the pension drop, still results in a £55,000 decrease in pension pot against parents not in those shoes, People’s Partnership’s research showed.

The knock-on effect of the situation has caused two-thirds (64%) of parents of disabled children to worry about their financial security.

Further, more than half (53%) of the 2,000 respondents surveyed by provider are not confident they’ll be able to have the retirement they want once they reach retirement age.

The retirement burden for parents is impacting millions in the UK, as over a quarter (27%) of parents have at least one child with a long-term health condition, impairment or illness.

Meanwhile, only a tenth (11%) feel like they are properly supported by the Government or charities. As it stands, you are eligible for a carer’s allowance if you take on over 35 hours of unpaid carer’s responsibilities.

The allowance set by the Department for Work and Pensions (DWP) is £81.90 a week, but carers are not applicable if they earn over £151 a week, once tax deductions are factored in. If a carer earns as little as one penny more than the limit, they need to tell the Government department, an issue a Government select committee said needs urgent reform.

‘Dire need for more comprehensive support structures’

Currently, there are around one million children aged under 16 who are disabled in the UK, Government statistics show, and parents of those children need more support, says Nicola Sinclair.

The head of responsible business at People’s Partnership, added: “There is a dire need for more comprehensive support structures for parents caring for children with long-term health conditions.

“Better access to financial planning resources and robust support systems would help relieve some pressure on this forgotten group of people, but further action is needed if we are to avoid another pension gap widening further.”

Sinclair also believes employers who do not comply with flexible working policies adequately for parents caring for their disabled child should be held accountable.

She added: “We need to develop resources tailored to these employees who care for a disabled child, with a focus on combating stigma and creating more inclusive workplaces that allow them to remain in and return to employment.

“Our research shows that some parents of disabled children are facing poverty in retirement unless things change dramatically.”

‘Little surprise parents are at a disadvantage’

Richard Kramer, the chief executive of Sense, said: “The research highlights the stark reality for parents of disabled children, who face significant financial hardships due to their caregiving responsibilities.

“At Sense, we see firsthand the challenges these families face. Very few parents, who are struggling day to day, will have the luxury of thinking about retirement. So, it is little surprise that they’re at such a disadvantage when it comes to saving.

“Local and national government must commit long-term resources and funding to support families. And employers must do their bit too – creating more supportive environments with improved flexible working policies. We need to show that we value these incredible individuals in our communities.”