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New mums should be given £2,000 to add to their pension fund.
Consumer group Which has suggested that all new mothers should get a £2,000 0ne off lump sum from the Government to add to their pension fund.
They lose income and related pension contributions while caring for children and this money would make up for some of it. The suggestion is to ensure that a mother or father does not suffer financially in their retirement. Because they took on childcare responsibilities.
It was found in the analysis which was conducted in partnership with the Pensions Policy Institute that women who reduce their hours or take the time off work to care for a child. Will be hit by a motherhood pension penalty which could mean they get £15,000 less in their retirement. Compared on average to a full time working mother. The average working women who took time off for childcare might save £68,000 compared to £83,000 for working women who took no time off.
Under the current system, there is a preexisting gap between the pension savings and benefits of men and women and it grows when taking a break from work to look after children is taken into account according to Which.
Which has suggested that each household should be able to choose which parent or guardians pension scheme should get the £2,000 contribution. If no scheme is nominated the contribution should be made to an account with NEST which is the auto-enrolment scheme set up by the Government.
Which Money believes that if the Government is committed to pension equality a £2,000 pension contribution should be introduced for all first-time mothers. They also believe that the minimum contribution rate should be raised for all middle-class earners.
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