Parents of disabled children could face £138K pension shortfall | Personal Finance | Finance

Parents of disabled children are being urged to review their retirement funds to avoid a potential shock in later life.

New data indicates that parents who leave the workforce to care for their disabled children could be £138,000 worse off in their later years compared to average workers, as reported by The People’s Partnership to The Sun. This sum equates to approximately nine years’ worth of retirement savings, according to the Pensions and Lifetime Savings Association.

The association states that a single pensioner requires at least £14,400 annually for essential expenses during retirement. This calculation highlights the importance of workplace pension contributions, which full-time carers for children will miss out on.

This is particularly significant when considering the compounding effect of regular pension contributions throughout an individual’s career.

Consequently, these parents will not benefit from employer contributions and tax exemptions. Research from The People’s Partnership suggests that 6.7 million individuals across the UK may face a financially strained retirement due to their caregiving responsibilities.

The study also discovered that two-thirds of parents with disabled children are concerned about their financial future. The People’s Partnership is now urging employers to grant parents greater flexibility in juggling their work and home life commitments, so they don’t have to compromise their future security to look after their kids.

The group has highlighted that even a return to part-time employment can significantly bolster parents’ pension savings, with a £49,000 boost at retirement compared to those who don’t resume work. However, this figure still falls short by £89,000 compared to full-time working parents.

Those who take only a short hiatus from full-time employment to focus on childcare fare better, ending up approximately £83,000 ahead in their pension funds.

Sense’s chief executive, Richard Kramer, has spoken out about the “stark reality” confronting parents of disabled children due to their intensive care responsibilities. He’s calling on governments to “commit long-term resource and funding” to support these families, advocating for more accommodating and flexible workplace policies from their employers.

He pointed out: “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.”

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