Parents could face a £183,000 pension saving shortfall after taking time out of work to raise children, research from Royal London has found, with gender imbalances continuing to have a costly impact on retirement savings.

Royal London's report, Tackling the gender pension and wealth gap, showed a "clear distinction" between the career paths of men and women after becoming parents, as women are still far more likely to stop or reduce their working hours for childcare after becoming a parent.

In particular, the survey found that leaving work or going part time wasn’t even a consideration for around half of male workers, while far fewer women, only around a quarter, said the same thing.

The research emphasised the financial impact of this gender imbalance, revealing that
many mums face a pension penalty of up to £183,000 as parenthood means juggling their career or putting it on hold until their child reaches secondary school.

Shifting to part-time work also had a significant impact on retirement savings, as Royal London found that mums can miss out on pension savings of nearly £92,000 when juggling childcare and working part-time until their child reaches secondary school.

Royal London pointed out that a shortfall in pension savings alongside reduced, or missed, National Insurance contributions creates a "double whammy", as women could face a reduced amount of state pension they are entitled to without the full 35 years of NI contributions or credits.

On top of this, the group noted that women tend to live longer than men, meaning they face a longer retirement with less pension savings.

Commenting on the findings, pensions expert at Royal London, Clare Moffat, said: "Altering working patterns after having children most often falls to the female, but comes with a sting in the tail.

"Women not in paid work because they are bringing up children can miss out on building up a full state pension and be tens of thousands of pounds worse off in their personal pension.

"Data tells us that the majority of responsibility for raising children is carried out by women, and adversely impacts their income.

"Not only does the interruption to their employment pattern impact their financial security and independence in the short term, it also affects them in later life by creating a huge gap in their retirement savings.

"Reducing hours or stopping work altogether to care for children means pension saving takes a hit and it might also mean that they don’t have the 35 years of national insurance contributions or credits needed for the full state pension."

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