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Press comment: SMF pension proposals show where government has fallen short with social care

28/10/2019

If you are covering the Social Market Foundation’s proposal that the government should pay public money into the personal pensions of women who take time out of work to care for children or elderly relatives, please find below commentary from Ian Browne, pensions expert at Quilter:

Ian Browne“Start early when it comes to saving – it’s an adage spouted by many and its importance shouldn’t be underestimated. But for some it is even more important, including women and anyone who may take a career break. Women, in particular, generally have two additional elements that make it of vital importance that they benefit from the magic compounding interest – often they take time out to take care of loved ones and they live longer.

“The proposal from the Social Market Foundation has merit as carers are the unsung cogs that keep the wheel of society moving. However, they do so at a cost to their own wellbeing including their financial wellbeing which has long term lasting impacts and could prohibit their own ability to have a secure retirement.

“A career break can have a substantial impact on your pension pot. For instance if you are auto-enrolled on a salary of £45,000 from when you are 22, with a retirement age of 55 and you take a 2 year career break at 35 you will end up with 6% less in retirement than if you hadn’t taken a break.

“However, with pensions already costing the government somewhat incomprehensible sums of money it is unlikely they can deliver this proposal across the board. However, there is scope to make the provisions for those providing care of an elderly relative fairer, an area where previous governments have fallen well short in. 

“For example, if you formally register as a carer for someone you can get some benefits and NI credits toward the state pension but it is nowhere near satisfactory. When we eventually get some form of social care policy from the government, it needs to address this issue head on. The current system in some ways levies a ‘dementia tax’ on those who are caring for someone with the debilitating condition, and can have an enormous impact on their ability to earn and thus their ability to save for their own later life.

“A good financial planner can help you work out the best way to mitigate the impact of caring duties. For instance it may be both tax efficient and responsible for the working partner to fund their partner’s pension.”

For more information contact

Kathleen Gallagher023 8072 629307990 004932kathleen.gallagher@quilter.com
Gregor Davidson020 7002 716407917 522784gregor.davidson@quilter.com

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.7 billion in investments (as at 30 September 2019).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

The Quilter plc businesses are being re-branded as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Charles Derby Group (becoming Quilter Financial Advisers)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Wealth Solutions in 2020)
  • Old Mutual International (becoming Quilter International in 2020)

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