With many of us currently working from home, and schools and nurseries closed, those with children are having to find solutions as existing education and childcare arrangements are put on hold.
While the added duties of home-schooling and looking after younger children on top of work responsibilities may be stressful, there will come a time when things begin to return to ‘normal’. When that time comes, our experiences now may reveal new choices in childcare.
Sharing the care
Fidelity’s research¹ shows that, when it comes childcare, 75% of women adjust their working life after starting a family, while over half of men (51%) continue working full-time. Women are also more likely to take a career break to start a family and shared parental leave remains chronically under-used. Only 9,200 people opted to take shared parental leave in 2017/2018, this is just 1% of those that are eligible².
Now we are at home, many fathers who work full-time have the opportunity to be more involved in the day-to-day care of their children. This is particularly true for those whose partners also work and families find the balance between work and home responsibilities.
This may have brought a fresh perspective for many and parents might be taking another look at how they work and the effect on the family. Many may want to find a better way of working and consider using flexible working options to share the care.
Reconsidering the financial cost
For many, the monthly cost of childcare is bigger than their grocery bill and transport costs and second only to their housing costs. For some families the cost of childcare even eclipses the monthly mortgage payment.
While reviewing current working and childcare arrangements, parents may look at options to reduce those hefty bills. One way would be to adopt a more shared approach and rely less on providers like childminders, nannies and nurseries.
For some, there may be no choice - recent events mean that several private nurseries are under threat, which could mean fewer and fewer childcare places available. Less availability tends to mean higher prices too.
Minding the (pensions) gap
There are long-term costs of childcare too. Giving up a career or choosing to reduce working hours impacts earnings for the non-working parent and also affects how much is being saved each month in workplace pension contributions.
These long-term costs carry into retirement, more often for women. Figures from the Pensions Policy Institute (PPI) show there are 50% more women than men heading towards retirement without any private pension savings. Those women who do have private pension savings in retirement, only have one third that of what men have saved. To put this into numbers: by retirement, women would have accrued approximately £51,000 in pension savings, in comparison men would have saved around £157,000 .
If childcare can be shared, increased working hours and increased salary could lead to increased pension contributions. Don’t forget that employers may also contribute too.
Adapting for the future
Recent business closures and working from home has demonstrated to parents that it is possible to adopt a more flexible approach to working and share childcare.
For some families, greater flexibility in the way we work may raise the possibility for men to take on more of the childcare and free up women to increase their hours and return to their careers.
When that happens, women can start to reclaim some of that earning potential that has been missed due to taking the role of primary care giver.
Important information: The value of investments can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular investment or action. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser. Withdrawals from a pension product will not normally be possible until you reach age 55.
1Fidelity International surveyed 2,000 UK adults, with an equal gender split, on their views around money and their finances. All respondents had over £1k worth of investible assets. Research was carried out by Opinium Research in February 2020.
2Research conducted by EMW, based on data provided by HM Revenue & Customs, covering the period April 2017 to March 2018.
3PPI Report: Understanding the Gender Pension Gap, July 2019.