The pensions parenthood penalty holding women back

Published  22 January 2024
   4 min read
  • Taking time out of work to raise children can lead to a pension savings shortfall of £183k
  • Even working part time until children reach secondary education could mean a pension penalty of nearly £92k 

According to analysis by Royal London, the UK’s largest life, pensions and investment mutual, the financial impact of becoming a parent means many mums face a pension penalty of up to £183k as parenthood means juggling their career or putting it on hold.

Findings from its latest report ‘Tackling the gender pension and wealth gap’ reveals a clear distinction between the career paths of men and women after becoming parents. The findings highlight that women are still far more likely to stop or reduce their working hours for childcare after becoming a parent. Leaving work or going part time isn’t even a consideration for around half of male workers, while far fewer women, only around a quarter, say the same thing.

According to ONS data, the most common arrangement among families in the UK is for the father to work full-time, while the mother works part-time, until the youngest child in the family is 11. This is the set up for around half of families. The reverse, where the mother works full time and the father works part time only occurs in about 2% of families.

Over 9 in 10 (92.1%) fathers with dependent children work compared to three in four mothers (75.6%)^. The impact of more women taking a step back from their career to care for their children is highlighted in the labour force participation gap, with 1.65 million fewer women in employment in the UK than men*. Employment figures also show just how acute the difference between the sexes is, with over twice as many (nearly 3.6 million) female part-time workers than men*.

The financial impact of parenthood

The gender imbalance can also have a costly impact on retirement savings. Mums can miss out on pension savings of nearly £92k by juggling childcare and working part-time until their child reaches secondary school. And the consequence of leaving work altogether for the same period can create a gigantic £183,000 hole in pension savings.**

A shortfall in pension savings alongside reduced, or missed, National Insurance contributions creates a double whammy, meaning women could face a reduced amount of State Pension they are entitled to without the full 35 years of NI contributions or credits. Mums who look after children and aren’t earning can get protection for their state pension record by claiming Child Benefit, which automatically provides NI credits until the youngest child is 12. Those families who don’t want to receive Child Benefit, because one parent breaches the earnings limit, can still receive credits, but the non-working parent needs to officially ‘claim’ Child Benefit to receive the NI credits. On top of that women tend to live longer than men, meaning they face a longer retirement with less pension savings.

Clare Moffat, pensions expert at Royal London:

"Altering working patterns after having children most often falls to the female, but comes with a sting in the tail. Women not in paid work because they are bringing up children can miss out on building up a full state pension and be tens of thousands of pounds worse off in their personal pension.

"Data tells us that the majority of responsibility for raising children is carried out by women, and adversely impacts their income. Not only does the interruption to their employment pattern impact their financial security and independence in the short term, it also affects them in later life by creating a huge gap in their retirement savings.

"Reducing hours or stopping work altogether to care for children means pension saving takes a hit and it might also mean that they don’t have the 35 years of national insurance contributions or credits needed for the full State Pension.

"The number of decisions you’re faced with when you become a parent can be overwhelming, but shouldn’t just involve the length of maternity leave or dealing with childcare costs. Talking to your partner about money and thinking about how your financial planning decisions impact you as a couple, both now and in the future, is vital. That way you look at all options available to both people in a relationship."

Notes to editor

^ Families and the labour market, UK - Office for National Statistics ( (Figure 5)

* House of Commons Library, UK Labour Market Statistics, published December, 2023.

Royal London partnered with independent research agency H/Advisors Cicero to undertake a nationally representative survey of 3,000 adults in the UK. Fieldwork was conducted in October 2023.

** Royal London analysis: Based on a worker age 22 with a starting salary of £24,000 with 2.5% wage growth per annum, contributing monthly pension contributions of 10%, stopping/working part time between age 30 to 42, then working full time until state pension age of 67. Investment growth (monthly) of 5% (not including charges).

  Full time 12 years employment gap 12 years working part/time
5% growth £585,080 £401,654 £493,367
Difference compared to full time worker   £183,426 £91,713

For further information please contact:

Neil Cameron, PR Manager

About Royal London

Royal London is the largest mutual life, pensions and investment company in the UK, and in the top 25 mutuals globally, with assets under management of £162 billion, 8.6 million policies in force and over 4,200 employees. Figures quoted are as at 31 December 2023. Learn more at