Jasmina's blog: My 4 Year Old Daughter Has A Pension – Here’s Why
There has been recent discussion in the press about the increasing pension gap between men and women at traditional retirement age and at the younger end of the career ladder. Some of these articles suggest that women/primary carers should delay taking their state pension in order to maximise the amount that they are entitled to or pay extra into their company pensions before taking a career break to care for children, hounds or elderly relatives.
These are sensible suggestions for women who (1) happen to be company employees with a decent group pension scheme and (2) possess a crystal ball or heightened life planning radar to predict when they might need to take a break from their illustrious careers.
This advice bugs me. My husband and I have both worked in the City for nearly 20 years, starting out in graduate roles at the same time (at similar salary levels) and progressing through the ranks in tandem. So far, so fair.
Once I fell pregnant with our eldest child, this activated a spiralling pension gap between us. We initially tried our best to juggle our stressful jobs whilst childcare costs haemorrhaged our household finances (this was in the dark ages when we were in the office on all working days). After each maternity leave, I tried doing a full time role on a 4 day working week (with a corresponding 20% pay cut and reduced pension contributions), but then my dad was diagnosed with Alzheimer’s disease and needed my support. I had reached my limit. I threw in the employee towel and became self-employed – working remotely from home in order to gain control over my workload and fitting it around caring for my children and dad.
My career trajectory is not unique. I know many primary carers who have quit work completely since having children or, like me, are seeking work-life balance by trying our hand at self-employment. I’m fortunate to be in a position where I have opened a SIPP and continue to make pension contributions into it, albeit erratically, such is the feast or famine nature of self-employment.
I’m convinced that we need to treat carer career breaks in the same way as a traditional retirement i.e. something that is going to happen and something that we need to prepare for from the start of our careers. We could wait for the Government to address this gender gap by making shared parental or elder care leave more financially enticing, but this is like waiting for Godot. I believe that we need to educate our children on personal finance from a young age so that they automatically top-up pension contributions from the start of their careers to cover potential future career breaks and enjoy the power of savings compounding. I’ve also opened a Junior SIPP for my 4 year old daughter (yes, a 4 year old has a pension!), just to give her a fighting chance of closing this gap.
Jasmina, a lawyer, and her husband, who works in Fintech, both work fully remotely to fit around parenting their two children, aged 4 and 9.