“It’s a gut-wrenching decision. You know in your mind that you’re doing the wrong thing. But you have to do it because there’s no other choice.”
Victoria Jones feels herself torn as she racks her brains in an attempt to think of any other way her family can slash their costs and outgoings as they feel themselves buckling under the weight of financial pressures.
“We’ve cut back and cut back – and now we’ve reached that limit where there’s nothing else to cut, so you start looking at things you would have once classed as essential – such as pensions,” she tells i.
Victoria, 35, stopped paying into her pension around the time she became pregnant with her daughter Hannah, now 18-months-old, in 2020. “With Covid and job security, I thought I’d stop my pension payments for a while, but I fully intended to start paying into it again.
“But then, the cost of living crisis hit and the price of everything went up – and now there is no way I could afford to contribute to my pension.”
Victoria and her husband Ben both work full-time in support services roles at a university in Birmingham. They earn a combined wage of £45,000 – but knew that one of the benefits of their jobs was the good pension scheme. Having stopped her own pension payments, Victoria, an admin assistant, reassured herself that at least one of them still had a decent pension.
However, she says the extortionate costs of childcare mean that Ben, a supervisor in cleaning services at the university, is now seriously considering stopping paying into his pension too, so they can afford to put their daughter into nursery from next year when her grandparents can no longer have her.
“We are having to risk our future finances to take care of the current situation,” explains Victoria. “It makes me feel angry and frustrated, as we shouldn’t be forced into his position when we have worked hard all our lives. But when you’re a working parent, there’s no financial help until your child is three.”
Victoria and Ben are among a growing number of parents who are abandoning paying into their pensions – or simply can’t afford to pay into one in the first place – as they sacrifice their future finances to deal with the more pressing present demands.
Campaigners warn that parents – with women being particularly impacted – are risking poverty in later life as they put off pensions to afford childcare costs and say urgent action is needed to prevent a crisis when parents reach retirement age.
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Victoria tells i she is baffled and angered by the rules when it comes to childcare support, as she discovered that if she gave up work, she would find herself entitled to free childcare.
“It is ridiculous and makes absolutely no sense,” she says. “But I have looked on the government website and if I gave up work and was on jobseeker’s allowance, I would get free childcare hours from when Hannah turned two.
“But as working parents, you have to wait until your child is three before you get any free childcare hours. This seems madness. Why should you have to give up work because childcare is so expensive, only to then have it offered for free? I don’t see the logic behind it at all. Why should I not progress in my career because of childcare?
“It is very difficult as we are earning £45,000 between us, which is above the threshold to get support, but not enough to live comfortably. We have looked into me not working to save the childcare costs, but I shouldn’t have to do this.”
Victoria says the only reason they have been able to manage with childcare up until now is because her parents have been looking after Hannah since she returned to work in January 2022 and she has a flexi-day on a Friday so is able to look after her then.
But from next year, Hannah will need to go into nursery – and it is meeting this cost which is making Ben contemplate halting his pension payments as well.
“My parents have been brilliant in having Hannah since I returned to work,” says Victoria. “But Hannah is getting more mobile now and more difficult to look after and they are not getting any younger.
“My dad still works part-time and my mum’s health isn’t great. They love Hannah to bits, but I feel guilty about burdening them and it feels unfair to expect them to look after her so much when they’re getting older.”
That isn’t the only guilt plaguing Victoria as she is also consumed by remorse for her daughter as financial struggles mean she can’t envision giving her the future she’d ideally want to.
“We struggled to have Hannah and children were something we really wanted,” she says. “Ideally, we would want to have another child around now. We would love for Hannah to have a sibling, but we can’t even consider the possibility – and we feel guilty at not being able to give her one.
“Ben began working at the university when he was 17, so he has been paying into his pension for all these years and I thought at least one of us has that security. But now he is seriously considering stopping his pension payments so we can cover childcare costs.”
It is the prospect of not being able to provide for their daughter for the future that fills Victoria with the most regret. “My parents always paid into a pension and my dad accessed some of that early and helped both me and my brother when it came to putting a deposit on a house.
“As a parent, I would love to be able to do that for Hannah and give her that security. But just paying for the everyday basics is a struggle and I feel constant parental guilt.
“Ben and I have always worked as we had that ethic instilled into us by our parents. Not being able to pay into our pensions is a real worry as we are both in our 30s and need to think about the future. But at the moment, it is the present that is more important.
“Not paying into our pensions is a gut-wrenching decision and deep down, we know it’s the wrong thing. But we don’t know what else to do.”
For some working parents, paying into a pension has never been a possibility because they have never had the cash to spare to invest in the future. And some of them feel with the current economic climate, they can’t envisage a time when they can afford a pension.
Christina Loach, a 31-year-old self employed hairdresser admits she has never had a pension. The mum-of-three tells i she began feeling terrified about the future and recently looked into getting one, but just couldn’t justify the money.
“I have always done hairdressing, but after doing my apprenticeship, I worked in a few different salons and pensions were never brought up. I then had my eldest son Rocco quite young when I was 19 and went into hairdressing part-time after having him, so that could have been why I never really thought about a pension,” she says.
“When it came to pensions, I always thought: ‘That’s a million years away.’ It’s only the last two or three years that I’ve thought that I seriously need some sort of pension.”
Christina, who is married to Paul, who works in building services, has children Rocco, 11, Bella, seven and Rosalie, two. Since 2020, she has been a self-employed hairdresser and tries to juggle hairdressing with childcare either by working evenings when her husband is at home, or having her two-year-old in the salon with her playing with her dolls.
“It is a massive juggle,” she admits. “I’ve always done my hairdressing around the kids. I know I need a pension, but when I looked into it, I just couldn’t afford it. The one I looked at wasn’t even very good and it was around £70 a month which isn’t doable.
“I’ve reduced my little one in nursery to one day a week as that’s all I can afford and my eldest has gone to high school and his bus fares for a catchment area school cost £1,000 which is just outrageous.
“Everything is really expensive, but childcare is the main crux of the issue. I can’t work as many hours as I need to to earn the money I would need to pay for my child to go into nursery while I’m working.
“I simply can’t afford to pay into a pension because every penny is swallowed up. It frightens me, but it is physically out of my control as I can’t magic the money up.”
Christina says she worries as she suffers from joint problems and knows she will not be able to work as a hairdresser for ever, as it involves lots of standing. She has considered finding a job where she is an employee rather than relying on the unpredictability of being self employed, but knows finding something which fits around school pick-ups to save her paying for wraparound care and that pays enough to justify her putting her youngest daughter in nursery will be almost impossible.
“I try not to think about pensions and the future because it just sends me into a spiral of worrying,” she confesses. “My husband is working seven days a week on call and couldn’t work any more hours. But I keep making him feel guilty by saying I sometimes feel like a single mum. However, I know he is only doing it to keep our heads barely above water.
“My mum keeps telling me I desperately need a pension. She worked in the NHS and had a great pension, but didn’t put into it and now needs to work until she’s a lot older because she hasn’t put into a pension long enough. But I just can’t see a way of affording a pension.”
Even those who have pensions which are traditionally seen as great value for money are ditching them, due to being unable to afford childcare.
Elizabeth, whose name we have changed to protect her identity, works as an NHS midwife and is in a senior band 7 working part-time with her partner working in a full-time job, but tells i she still cannot afford her pension on top of all her outgoings.
She says since starting her maternity leave in 2020, she cancelled her pension contributions and reduced her working hours on her return to work. She sends her daughter to nursery one day a week which costs them £280 a month and says she can’t afford to send her any more than this – which means she can’t work any more hours.
“I currently work one 12.5 hour shift during the week and another at the weekend,” she explains. “I am lucky that my partner and I earn enough to cover the majority of our bills, but I absolutely cannot afford to lose hundreds to my pension each month.”
Elizabeth explains that although the NHS pension is great when it comes to retirement due to employer contributions, it does not have a variable or voluntary rate so she simply could not stay afloat if she had to pay a set percentage of her monthly income into a pension.
“The contributions were roughly £320 a month for me in 2019, which feels astronomical now,” she says. “If I change my mind about paying into it, I do have plenty of time to contribute as I’m not entitled to the full amount until I’m past the age of 70.”
Elizabeth says one of the problems is if she were to increase her working hours to offset the costs of childcare and pension, it is unlikely that she could get another set working day and even more unlikely that she could secure a flexible nursery day to suit her hospital rota. This vicious circle means she can’t work more to earn more, as she can’t arrange the childcare.
“I feel very privileged on the one hand to be able to spend so much time with my daughter while she is small, but I do feel trapped by childcare and financial circumstances to not be able to increase my pension and prepare a pension for my future,” she says. “For now, paying the bills and heating the home is the priority.”
Joeli Brearley, founder of Pregnant Then Screwed, says: “Women have been limiting their career progression and earning potential for decades due to extortionately expensive childcare.
“For some women this means falling out of the workplace and cutting off pension contributions entirely – which is the case for at least 870,000 women in the UK.
“Then there’s 1.7 million women who are prevented from taking on more hours of paid work due to childcare issues, be that availability or affordability.
“The knock-on effect is that pension payments are falling off a cliff. When you’re working part-time to save on childcare – or throwing in the towel because paying to go to work doesn’t make sense – then monthly pension payments will naturally be reduced – or they will stop completely.
“As a result, we have an ever-growing gender pension gap which starts at 17 per cent at the beginning of women’s careers, and then reaches 56 per cent when we hit retirement age.
“This penalty could be reduced if the Government developed policies which work for mothers.
“Properly funded childcare and flexible working to be the default way of working are critical if we want fewer women to live in poverty in their old age.‘’
Working Wise, the older worker advice and support site, says it carried out research which revealed women fear they will have to work beyond retirement age because their pensions aren’t sufficient.
Their data showed 71 per cent of women surveyed had taken a career break or worked reduced hours, often due to caring responsibilities falling to them. A huge 50 per cent of the 1,356 older workers aged 45-plus questioned said they would need to keep working past retirement to make ends meet.
Mandy Garner from Working Wise, says: “These career decisions are coming back to haunt women in later life when they are left stuck, unable to retire, having to pick up the financial slack in their pension pots.
“The gender pensions gap is growing, not shrinking, with the cost of living crisis likely to widen it.
“This should be a huge wake-up call – we need to increase the support that women have when it comes to truly understanding their pension savings, we need better education and better support from employers too if we’re going to start to close the gap.”
A Government spokesperson said: “We are committed to ensuring people have the support and information they need to make informed choices about their financial futures, but we also know that many households and childcare providers are facing pressures from recession and high inflation.
“Improving the cost, choice and availability of high-quality childcare for working parents is important for this Government.
“We have spent more than £20bn over the past five years to support families with the cost of childcare and the number of places available in England has remained stable since 2015, with thousands of parents benefitting from this support.”
