The impact of caring for others on your retirement

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If you’re caring for someone, your pension plan and retirement plans may not be front of mind. But caring for others can have an impact on your future retirement income, so there are some important things to keep in mind if you have caring responsibilities.

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First, it’s important to acknowledge your role as a carer – something that takes an average of two years for people to do. You’re counted as a carer if you look after a family member, partner or friend who can’t cope without help with their illness, frailty, disability, mental health or addiction. 

Your retirement plans

Caring responsibilities often fall to people unexpectedly, so it may not have been something you prepared for when you set out your retirement plans. 

For example, caring can come with additional expenses – higher bills, travel costs, food, assisted living etc. – so you might find you need to access your pension savings earlier than planned to help cover the costs.

These additional costs are also something to consider when planning how much you’ll need to live on in retirement. And, importantly, if you’ll have enough savings to cover it all.

On the other hand, if you qualify for Carer’s Allowance or other benefits, it could help to balance out some of those extra costs. 

So take some time to get a clear picture of your new incomings and outgoings. Then review your retirement plans and factor in any changes. If you have a Standard Life pension plan, it’s easy to review it online or through your app. If you’re not registered for our online services yet but would like to know more, you can find more information on our website. 

Pausing or stopping your pension payments

If you need to take some time out from work, reduce your hours or leave employment entirely to care for someone, you might think about cutting back on your pension payments as a result.

But if you’re part of a workplace pension scheme, then your employer also pays into your plan on your behalf. Which means doing this could mean missing out on your employer’s payments, too. So, if you’re continuing to work in some way, think about trying to keep up with some amount of pension payments if you can.

If you need to stop working altogether, setting up and paying into a personal pension is still worthwhile. Although you won’t get the boost from your employer, you’ll still get all of the great tax benefits a pension plan offers, which can give you a helping hand when trying to reach your retirement goals.

Your State Pension

National Insurance credits

To receive a State Pension, you need to have paid National Insurance (NI) for a minimum number of years. And you might find that you haven’t met the minimum requirements if you’ve taken time out of work to care for someone.

However, you might be able to get NI credits if you’re not working but claiming certain benefits. It’s worth checking if you’re eligible for these credits because they could help to fill gaps in your NI record. If you’re not entitled to NI credits, then you might still be able to pay voluntary NI contributions to fill the gaps and qualify for the State Pension.

Carer’s Allowance and the State Pension

If you get Carer’s Allowance, you won’t be able to claim the full amount of your Carer’s Allowance and your State Pension at the same time.

If the amount you get for your State Pension is less than your Carer’s Allowance, then you’ll get the difference paid in your Carer’s Allowance. 

If you amount you get for your State Pension is more than your Carer’s Allowance, then you won’t be eligible for Carer’s Allowance. However, it’s still worth applying because you might be able to get an ‘underlying entitlement’. This basically means that by telling the government you’re a carer, you could find that any benefits you’re already receiving could increase, or you become eligible for certain benefits for the first time. 

You can find out more about benefits for carers of working age and carers of State Pension age on Carers UK.

Where to get help and support

Caring for someone is a huge responsibility which can come with many challenges, so it’s important to know where you can get the support you need. Here are a few resources to help you get started:

• Carers UK offers help, advice and practical support for carers
• MoneyHelper has lots of useful information about the support services available to carers
• The NHS can give you an idea of the support and benefits for carers
• Gov.uk explains how carers allowance works and lets you check if you’re eligible

 

The information here is based on our understanding June 2024 and shouldn’t be taken as financial advice. If you are unsure, you should speak to a financial adviser.

Standard Life accepts no responsibility for information on external websites. These are provided for general information.

A pension is an investment. Its value can go down as well as up and it could be worth less than was paid in.