Unpaid Carers can get their pension cut: About 5 million UK citizens are unpaid carers. Unpaid carers are those who take care of ill, mentally unstable, old, or addicted people voluntarily taking some time out from their work. But these volunteers are warned that they may lose thousands of pounds in retirement.
Royal London warns that people may get their pension short in their old age, especially women as they take time off from their work to take care of someone. Many companies give disclaimers that many adults do volunteer work but don’t realize how much it will affect them in retirement.
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This problem is most likely to create a gender pension gap as women are more likely to do the retirement work. “Caring responsibilities mean a million women below age 50 are not in employment while many more take on lower paid part-time jobs to allow them to juggle both.
“Figures from the Office for National Statistics show that older female workers are twice as likely as their male counterparts to take on caring responsibilities – which unfortunately comes with a long-term cost to their retirement savings if they pause pension contributions.” said Clare Moffat, pensions expert at the insurer.
Many people regard it as an unfair system as 1 in 3 people are likely to be unpaid carers and cutting someone’s pension off just because they were helping someone feels evil.
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Carers Remedy
If you are a carer and don’t take a salary for it, even then can apply for carer’s credits that count towards your state pension entitlement but the condition is you have to do the volunteer work for 16 to 20 hours per week.
“Providing care for a family member can significantly impact your financial situation. However, it can also have a devastating impact on your future state pension entitlement too. Encouragingly, more individuals are now taking advantage of carer’s credits to ensure they don’t end up with gaps in their National Insurance record and don’t receive the full state pension as a result. said Jon Greer, head of retirement policy, at Quilter
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