Every week, grandparents carry out £127 worth of childcare duties.
Seven out of 10 mothers considered not returning to work because of childcare costs, despite nine in 10 wanting to, research from workplace pension provider Now: Pensions alongside the Pensions Policy Institute (PPI) has found.
As a result, grandparents pick up the slack, saving working parents up to £22 billion a year in childcare costs in order to allow mothers to return to work.
The time that grandparents spend on filling childcare duties amounts to an average saving of £127 per week, or £6,604 saved every year in childcare costs for parents.
The survey questioned more than 2,000 mothers aged under 45 in the UK. Seven out of 10 mothers believed that childcare would be impossible without the support of family and friends.
Thanks to the time spent out of the workforce, women are retiring on an average pension pot worth around a third the size of men's because they are working part-time or taking on care responsibilities, according to NOW.
Women who take time off work are retiring with a pension pot of £51,100, compared to men who have £156,500.
Echoing the recommendations of the Social Market Foundation think tank, workplace pension provider NOW: Pensions says the government should top-up the pension pots of those who have stopped work to care for family members or who are working part-time.
This would be the equivalent to benefit paid as pension contributions based on the auto-enrolment minimum of 8% under the national living wage, which is currently £8.21 an hour.
The top-up would cost the government around £2.7 billion and benefit more than three million women.
NOW: Pensions is also calling for the qualifying earnings band on auto-enrolment to be lowered to improve the pension of part-time workers. Currently, the first £6,136 of a salary is not included in pension contributions.
The pension provider says that these two policies could reduce the gender pensions gap by around 50%, having increased women’s pots by 114%.
According to the Office for National Statistics, despite the rate of working mothers being at its highest ever at 75%, almost three in 10 mothers with a child aged 14 years and under said they had reduced their working hours because of childcare reasons.
Joanne Segars, chair of trustee at NOW: Pensions, says: “The cost of childcare on the UK economy and latterly, on women’s pensions, needs to be urgently addressed by the government. While it’s encouraging to see that more women than ever are in work, more needs to be done to ensure that they have an equal opportunity to save for a comfortable retirement.
“While auto-enrolment continues to give workers the head-start they need to prepare for their retirement, the focus now needs to be on helping mothers return to the workforce.
“We are leaving it to grandparents to provide free childcare when we should be adopting a similar model to our EU counterparts whose economies are benefiting by getting mothers back into the workforce faster.”
Daniela Silcock, head of policy research at Pensions Policy Institute, says: “It’s crucial to note that no solution we modelled from the five-point plan gave women a large enough boost to their pension pot to match that of the average man’s.
“While policy changes, most notably the introduction of a family carer top-up and contributions paid on every pound of earnings, go some way to closing the gender pension gap, further social, policy and labour market changes would be required to close the gap entirely.
“More affordable and accessible childcare, plus flexible working options, would enable more women to return to work and recommence saving into their pension pot earlier.”
This article was first written by our sister magazine Moneywise.