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					                                                              ANNEX I

Parents and Carers Coalition Response to the Pensions
Commission Report: 31 January 2005
Recommendations

   That the Pension Commission use the principles for reform (Annex II) as a
    guide to assessing the way forward for improvements.
   The Coalition recommends that, if the current arrangements for home
    responsibilities protection (HRP) for the basic state pension and credits for
    state second pension for parents are retained, they need simplifying and
    improving to provide more effective coverage during periods of withdrawal
    from the labour market, or low paid part-time employment.
   Crediting towards state pensions should be extended to carers providing
    moderate amounts of care (20 or more hours per week)
   Carers need access to clear, accessible information about state pensions
    and advice on long-term financial planning, preferably through the
    voluntary organisations with which parents are typically in contact.
   Action is needed to encourage employer and employee contributions
    across all sectors of employment, including those where occupational
    pension coverage is historically low.
   More support is needed to enable parents and carers to take up paid
    employment and to secure access to better paid employment, including:

       o the extension of the right to request flexible working to carers and to
           parents of dependant children aged over 6
       o extend Working Tax Credit (WTC) to carers who are working 16 or
           more hours a week – as is the case for disabled people
       o an additional carers' element to WTC (similar to the disability
           element) to reflect the ongoing labour market disadvantage affecting
           carers and reducing their earning capacity.
       o integrated programmes of support for parents and carers who want
           to return to the labour market
       o effective measures and enforcement to combat discrimination on
           grounds of age and disability
       o additional help in tax credits for the higher childcare costs of
           families with disabled children to enable them better to save for their
           pensions
   We recommend that in its future work the Pensions Commission should
    assess the likely impact of any increase in retirement age upon carers,
    those they care for, and the net cost implications for the Government of a
    reduction in the number of available carers arising from any proposed
    changes to retirement policy.
   Look at solutions for pensions which include those already retired –
    valuing the contribution they have made before HRP was introduced, and
    the contribution many older people are continuing to make to society
   Examine the case for carers to receive Carer’s Allowance in addition to
    their state pension and for providing a carer's premium for those receiving
    Pensions Credit .
Who we are

The Parents and Carers Coalition welcomes the First Report of the Pensions
Commission. The Coalition, launched in March 2004, comprises around 40
organisations representing a wide range of interests including mothers, fathers, lone
parents, carers, disabled people, older people, childcare and care services, employers
and trade unions. We have come together to press the case for more support for the
unpaid work undertaken by Britain’s mothers, fathers and carers1 in raising children and
looking after disabled or elderly friends and relatives who need care and support.

In September 2004, the Coalition called (see "Can We Afford not to Care – Annex IV)
for Government and political parties to commit to a remodelling of the pensions system,
to ensure that carers and parents are fully covered within the state pension system for
breaks in paid employment or periods of low paid, part-time work Remodelling of the
state pension system is one of nine crucial steps that the Coalition believes need to be
taken the better to support Britain’s parents and carers.

General response on the Pensions Commission report

The Parents and Carers Coalition welcomes the analysis in the Pensions Commission
Report, pointing up the growing deficiencies in the pensions system. We strongly
endorse the decision of the Pensions Commission to extend its analysis from
occupational pensions to include state pensions, because only the state pension system
can provide for those who are outside the labour market or in low paid and/or part-time
work because of their parenting and caring responsibilities. We particularly welcome the
chapter on women, which sets out the key problems for women with caring
responsibilities in building an independent pension entitlement. The major cause of
women’s pension disadvantage derives from their child-rearing and caring roles.
These issues must be fully considered in your future analysis of the adequacy of
retirement incomes for the future and of any proposed changes to improve the
system.

While parenting disproportionately affects mothers’ employment patterns and long term
earnings, the prospective pensions of those fathers who are in growing numbers taking
on a major role in looking after children will be increasingly affected in the future. Carers
of disabled and elderly people include both male and female carers. The focus for the
future should therefore be to ensure that responsibility for parenting and caring
is rewarded within the state pensions system, regardless of the gender of the
person undertaking the care.

The Consultation questions

1. Are there any areas where the facts are wrong or where available sources of
   information have been overlooked?




1
 Carers look after family, partners or friends who are in need of help because they are ill, frail or have a
disability. The care they provide is unpaid.
                                                                                                               2
   The Coalition believes the Pensions commission has under-estimated the
   extent of the impact of parenting and caring responsibilities upon pension
   accumulation. While we welcome the efforts made to predict the long term financial
   consequences for retirement of typical employment histories, the range of career
   histories do not sufficiently include periods of withdrawal from employment and low-
   paid part-time work, typical of mothers and carers. In our view, it is highly likely that
   some parents and carers may face more problems than these models imply. Further,
   although the chapter on women provides a focus for the particular issues, the
   analysis is not mainstreamed effectively through the rest of the report. All too often,
   the examples given in the rest of the report treat men as the norm, despite women’s
   employment patterns being very different from men’s.

   The models used cover earnings, but not affordability. Mothers typically have
   high childcare costs to meet from often meagre earnings. Mothers of disabled
   children and carers typically incur additional costs arising from their caring
   responsibility and the additional needs of the person they are caring for –
   consideration of affordability needs to be factored into the Pensions Commission’s
   thinking.

   The Report has overlooked research on the projected trends in numbers of
   people of working age who are likely to have a caring responsibility in future.
   Caring for disabled and frail elderly people will affect their carers' ability to take
   employment and accumulate retirement income through earnings. (It also has huge
   implications for the level of state spending needed to support those in need of care.)
   The numbers of severely disabled children surviving into adulthood and indeed into
   older age is also increasing due to improvements in medical science and treatment.
   The Coalition would like the Pensions Commission to take on board this evidence on
   caring trends in its future analysis.

   There are overlooked diversity implications. The income gap between men and
   women is arguably even more acute for BME women, many of whom have
   remained outside formal paid employment altogether. The industries where such
   women have worked, such as textiles, have often been in the informal sector,
   rendering them without National Insurance contributions or access to an
   occupational pension scheme. The higher prevalence of self-employment among
   Chinese and Pakistani communities also means that women do not have an income
   of their own, although they may work in the family business.

   There is insufficient recognition of all these factors in the Pensions Commission’s
   Report.

2. Are the judgements that the Pensions Commission has made about future trends
   over-optimistic or over-pessimistic?


   Over-optimistic because of the issues identified above. The failure of the models
   used to fully take into account caring and parenting gaps in employment and the
   propensity to work part-time, along with the use of male work patterns as the norm,
   means that the adverse impact of parenting and caring on pension accumulation is

                                                                                          3
   under-estimated. The report assumes that parents working part-time will return to
   full-time work after their children start school. But the evidence shows this is often
   not the case – especially if there are other family members who need care.

   Lack of attention to projected trends in caring responsibilities means that the
   Pensions Commission may both over-estimate the potential for increasing
   individuals’ pension savings by means of increasing the state pension age and
   encouraging later retirement generally; while also underestimating the rise in
   demand for publicly-funded services to support carers and disabled or elderly people
   who need care. Projected savings to the Exchequer from a combination of an
   increase in the state pension age and later retirement need to be netted off against
   carefully researched assumptions as to the increasing costs of providing alternative
   services.

3. What should be the appropriate responsibility of the state in ensuring adequate
   pension provision?


   The State has a critical role in ensuring adequate pension provision for
   parents and carers, because of the essential contribution these groups make to
   society in a way which may preclude their pension accumulation during periods of
   full-time caring or parenting, or consequent low paid part-time work. The state is an
   enabler. By providing a framework of employment rights, financial assistance and
   service provision for parents and carers, it enables them to work and thus provide for
   their own retirement. The Coalition is seeking major improvements to ensure parents
   and carers have the support they need.




                                                                                       4
                                                                  ANNEX II

                                   Pension Principles

The Coalition recommends that any reforms must be measured against the following
principles to ensure that parents and carers are fully covered.

1. Accrual for all
     Everyone should accrue a pension in their own right independent of others.
     Everyone should accrue sufficient pension rights to exceed any means tested
      threshold.
     Means testing should only be a safety net for a small number of pensioners.

2. Simple and appropriate
     A pension system simple enough for people to understand and make the best
      choices for their own future, with all savings being of benefit.
     Everyone needs clear, simple information and advice, appropriate to their
      circumstances. Information should be available in different languages and advice
      and information needs to be targeted through community groups – language
      barriers make awareness raising of pensions particularly difficult for BME groups
     All should have access to simple long-term savings schemes that enable accrual
      of pension rights, with the savings risk placed on the individual appropriate to
      their level of income and ability to save.
     State pension policy should seek to close the gender pensions gap, for example
      tax relief should help all to save, not reinforce the saving habits of those most
      able to save.

3. Diversity
     The pensions system must recognise and value the diversity and complexity of
       the vital unpaid contributions that parents and carers make to society and the
       economy, and their more diverse employment patterns.
     Survivor provision should recognise all dependent couples whether married or
       cohabiting, same or different sex, as survivor pensions are vital until men and
       women are able to build up equal right to pensions.
     The Pension System must take account of the needs of BME women, many of
       whom have remained outside formal paid employment altogether.


4. Occupational Provision
    Occupational gender segregation should not contribute to the gender gap in
      pensions. All employers regardless of size should be encouraged to make
      substantial contributions to their pension schemes and should be able proactively
      to encourage all employees to join.
    Part time working should not be a barrier to pension accumulation

5. State Pension Age
     State pension age needs to account for the caring work undertaken by those
       around state pension age, ensuring that any rise in state pension age does not

                                                                                     5
      have a disproportionate effect on those not able to work due to caring
      commitments, or those from lower socioeconomic groups.

6. Employment
     Being in paid employment has a critical effect on being able to afford pension
      savings, therefore employment patterns should seek to enable parents or carers
      who wish to balance paid employment with parenting and caring, including
      flexible working and facilitating returning to work.
     The employment prospects of those approaching state pension age and beyond
      must be free from age and sex discrimination.




                                                                                  6
                                                                        ANNEX III

Detailed Response from some members of the Parents' and Carers' Coalition

Our response is confined to issues of pension accumulation and entitlement relevant to
parenting and caring. It focuses on three key issues:

  i.       the difficulty facing many parents and carers in securing access to a full state
           pension;

 ii.       the impact of career interruptions and extended periods in low paid part-time
           work typical of many mothers and carers on occupational and private pension
           provision;

 iii.      to consider the potential implications of an increase in the state pension age and
           later retirement, given the scale of unpaid work undertaken by older age groups
           in caring for sick, disabled or very elderly people, and in assisting parents by
           looking after grandchildren

followed by some important points on carers' allowance.

             i.   Access to State pension entitlement

Recommendations

         The Coalition recommends that, if the current arrangements for home
          responsibilities protection (HRP) for the basic state pension and credits for
          state second pension for parents are retained, they need simplifying and
          improving to provide more effective coverage during periods of withdrawal
          from the labour market, or low paid part-time employment.

         This needs to be accompanied by access to clear, accessible information
          about state pensions and advice on long-term financial planning.

Mothers

In the main, it is mothers, not fathers, whose employment is interrupted or changed in
pattern from full to part-time work by the birth of children. HRP for the Basic State
Pension already explicitly recognises the needs of parents who are looking after their
children full-time, or in part-time employment with earnings below the lower earnings
limit. The link between receipt of child benefit and HRP protection can be highly
effective in ensuring mothers are covered for their basic state pension. Nevertheless, as
the Pensions Commission Report acknowledges, out there are drawbacks, including:
 the ‘cliff edge’ whereby full state pension entitlement can only be obtained following
    years with HRP if mothers contribute for 20 years with full contributions from
    employment, or are credited through other qualifying benefits;
 HRP applies only to full years of caring, so part years of working and part years of
    caring may mean that contributions for that particular year may be lost and HRP is

                                                                                           7
   not as effective as receiving credits or paying contributions as the Commission itself
   point out (Ch.8).

The introduction of the State Second Pension (S2P), which for the first time, carries
credits towards a second-tier state pension for people who are at home because of
caring responsibilities and improved accrual rates for lower earners, was an important
development. However, the qualifying age of child for S2P (up to age 6) is much more
restrictive than the corresponding rules for HRP, where the qualifying child age is up to
age 16. Intermittent or short hours of part-time work where earnings are below the lower
earnings limit (LEL) for National Insurance contributions may be insufficient to build S2P
entitlements. Some mothers may not be working while their child is of primary school
age, leaving mothers without access to second tier pension while their child is still quite
young.

Fathers

While mothers predominantly carry the main responsibility for caring for children, more
fathers are now undertaking childcare responsibilities, including some who are the main
carer. The linking of HRP for the basic state pension with receipt of child benefit is a
very effective mechanism ensuring that mothers with dependent children who are not in
employment have their basic pension protected. Fathers, on the other hand, may be
unaware that, if they give up work or reduce hours of work to take on the main caring
role, they need to become the child benefit recipient to receive HRP for the basic state
pension. Lack of agreement between mother and father, transferring care from mother
to father part way in the year or delays to transfer child benefit payments may adversely
affect the prospective pension entitlement of fathers who are looking after their children
full-time. So any changes need to provide accessible and clear information to enable all
parents to plan as effectively as possible.


Carers

Recommendations

The rules for carers are particularly complex, stringent in terms of the amount of care
that qualifies for pensions protection, and difficult to access for some so:
        If retained, the complex arrangements for credits or HRP for the basic
            state pension and credits for S2P need simplifying and improving to
            provide more effective coverage for carers
        Crediting towards state pensions should be extended to carers
            providing moderate amounts of care (20 or more hours per week)
        Carers need access to clear, accessible information about state
            pensions and advice on long-term financial planning, preferably through
            the voluntary organisations with which parents are typically in contact.

Although much progress has been made within the state pension system to recognise
caring as a contribution for state pension purposes, there are drawbacks to the current
arrangements. In particular, the mechanisms for crediting periods of caring are far more
complex than the corresponding arrangements for parents and may not be understood
                                                                                         8
by the intended beneficiaries. There are many carers who will not have their pension
rights protected at all during periods of caring.

Basic state pension (BSP)

Carers may build entitlement towards the BSP in two ways:

   Through automatic credit for the BSP for periods in which they are caring for more
    than 35 hours per week and receiving carer’s allowance; or

   If they are eligible for HRP for the BSP, which they can obtain
         - if they receive income support because they are looking after a disabled person
    ( in this case cover will be automatic) , or
         - if they spend at least 35 hours a week looking after someone who, for at least
    48 weeks in that year, is receiving either the higher or middle rates of disability living
    allowance care component, attendance allowance, or constant attendance
    allowance. But cover is not automatic. To qualify they must apply within 3 years of
    end of tax year in which they were looking after the disabled person.

State second pension (S2P)

Carers who have no earnings, or earnings below annual lower earnings limit (LEL), will
be eligible for State Second Pension (S2P) if, for any complete tax year, they are:
 entitled to carer's allowance; or
 given HRP because they are caring for a sick or disabled person.

Thus there are two methods of securing state pension coverage depending upon what,
if any, state benefits are being received, and both rely on very heavy levels of caring
each week. Those eligible for HRP face the same drawbacks with HRP as for mothers
(see above).

Further, even those who are eligible may not be protected automatically. The current
system is difficult for individuals to understand. Without good advice, carers who need
to claim HRP may not submit their claim in time, and realise only when they receive
their state pension forecast that they have left it too late to claim for time spent caring.

Carers covered only for substantial caring commitments
The crediting arrangements for carers are much more restrictive than for parents. Only
carers spending at least 35 hours a week caring for disabled or older adults will have
their state pension protected. Yet many carers may have substantial responsibilities,
which affect employment and pension prospects, but which do not qualify them for state
benefits. Half of the carers of working age providing over twenty hours of care per week
do not work – around 650,000 people2. The more hours of care that are provided, the
more likely it is that a carer will have given up work to care. But sustaining employment
over time even for those providing moderate amounts of care can be difficult. After a


2
 Marilyn Howard Redressing the Balance: inclusion, competitiveness in employment. A report on barriers
and bridges for carers in employment, Carers UK, 2002.
                                                                                                    9
third year of providing care to a disabled or ill relative or friend, those providing 20 or
more hours of care are significantly less likely to remain in paid work.3

Recognition of shared caring responsibilities
The model of caring for the purpose of state benefits is based on one person caring for
one individual. It does not cover circumstances such as two sisters who share caring for
an elderly parent. As survival rates of severely disabled people improve, the incidence
of two people looking after one disabled person (especially a disabled child, even when
grown up) is believed to be increasing, because of their very high level of needs. For
example, there are an estimated 6,000 dependent children in the UK who depend upon
technological assistance for survival, and whose support needs are extremely
intensive4.

Only one person in a couple is eligible for Carer’s Allowance (CA), so the partner not
receiving CA could only have their pension protected if they were eligible for HRP. Their
caring situation may be virtually identical, but the way their state pension is acquired
may be different and could possibly lead to different levels of state pension entitlement.

Short-term or episodic caring
Caring commitments are not always undertaken on a full-time and continuous basis - for
example, if someone is caring for a person who has episodes of severe illness but
periods of remission, during which time the carer is able to work. So carers of children
or relatives with multiple sclerosis or sickle cell anaemia may have to stop work at short
notice to care for someone with these conditions.
     Unless the carer claims for each period that they provided care they may risk not
       having their state pension covered, and will possibly be ineligible for HRP or S2P
       if caring periods are for less than a complete tax year.
     While within the scheme all contributors are allowed five years between the ages
       of 16 and state pension age without making contributions, for example to cover
       periods of post 18 education, this may be insufficient lee-way for carers whose
       responsibilities have been intermittent. These rules are particularly inflexible for
       the lower paid. Higher paid contributors only need to work for a smaller
       proportion of the financial year to qualify for a full year of contributions. In
       contrast, carers who are lower paid may miss out on getting a full year of
       contributions if they miss contributing for part of the year on their low wages.
       More flexibility is needed in HRP rules to help people with these types of
       disability or sickness.


          ii.   Occupational, personal and stakeholder pensions

Recommendations

     Action is needed to encourage employer and employee contributions
      across all sectors of employment, including those where occupational
      pension coverage is historically low.
3
  Hirst M (1998) The Health of Informal carers: a longitudinal analysis, SPRU, University of York, quoted
in It Could be You – a report on the chances of becoming a carer, Carers UK 2001
4
  2001 estimates, information provided by Contact a Family
                                                                                                        10
     We would recommend wider changes that better enable parents and carers
      both to take up paid employment and to secure access to better paid
      employment. This would make it more affordable for them to save for
      personal, occupational or stakeholder pensions including:

           o the extension of the right to request flexible working to carers and to
             parents of dependant children aged over 6
           o extend Working Tax Credit (WTC) to carers who are working 16 or
             more hours a week – as is the case for disabled people
           o an additional carers' element to WTC (similar to the disability
             element) to reflect the ongoing labour market disadvantage affecting
             carers and reducing their earning capacity.
           o wider provision of flexible, quality services for carers and disabled
             and older people who need care
           o integrated programmes of support for parents and carers who want
             to return to the labour market
           o effective measures and enforcement to combat discrimination on
             grounds of age and disability
           o additional help in tax credits for the higher childcare costs of
             families with disabled children to enable them better to save for their
             pensions

Mothers
Mothers' incomes and career opportunities are particularly heavily affected by periods of
withdrawal and part-time work since, on average, women work fewer years in
employment than men, have more interruptions to employment for childcare and other
forms of care, and are more likely to work part-time. Their employment patterns are
closely connected to looking after children, with fewer women working when their
children are very young. Women from black and minority ethnic groups who may have
arrived in the UK part way through their working lives face particular difficulties.

The employment rate for mothers increases as the youngest child reaches school age
from 52% (where youngest child is under five) to 70% (where youngest child is aged 5 –
10), but there is little variation in the proportions of mothers working part-time
whether their youngest child is pre-school (67%), compared with primary school
age (63%). Rates of part-time work decline for mothers whose youngest child is aged
11 or above to 50%, and for women without children the part-time rate is 33%5. At least
some of these mothers may have incomes insufficient to take them above the lower
earnings threshold for National Insurance contributions. Vulnerable groups, such as
lone mothers, are particularly likely to be in low paid part-time work, and may not be
covered by S2P.

The hourly rate of pay for women is 82 per cent of that for men if they work full-time and
60 per cent if they work part-time6. While each year worked full-time is associated with

5
  Details of employment rates by age of child from NONS 2004 Labour Source Survey Spring 2003,
quoted in Facts about Women and Men in Great Britain, EOC, 2004
6
  ONS (2203) New Earnings Survey 2003, quoted in Facts about Women and Men in Great Britain, EOC,
2004
                                                                                               11
increased wages, this is not the case for years spent in part-time work – rather, part-
time work is associated with slight reduction in wages of 3% year on year 7. The part-
time pay gap for older women is particularly wide 8, making it much harder for older
women with caring commitments to save toward their pension.

The cumulative effect of these differences is that women (53%) are less likely than men
(63%) to be contributing to an occupational, stakeholder or personal pension, and to be
contributing smaller amounts when they do so. Part-time work is far less likely to attract
a pension. As the Pensions Commission report notes, in 2002 60% of women working
full time were in an occupational pension scheme compared to only 33% of those
working part time. Research on savings and life events found that 63% of those in
employment were saving for retirement, compared to only 5% engaged in family care. 9

The impact of low incomes on capacity to save for retirement may be compounded by
other demands upon the family budget. Mothers who are working may incur substantial
childcare costs, which typically come from their wages. British parents contribute on
average 75% of childcare costs, and this may reduce their scope for pension savings.
While at any given level of income women are slightly more likely than men to contribute
to a pension, since women’s incomes on the whole are much lower than men’s, typically
they have much smaller savings.

Lone mothers
Some mothers are particularly disadvantaged. Lone parents (90% of whom are lone
mothers) save less towards their retirement than other groups. In 2002/03 only 17% of
lone parents were paying into an occupational pension and 21% paying into a pension
overall10. Lone parents' wages do not necessarily lift them out of poverty: 38% of
children of a lone parent working full time, and 70% of those with a lone parent working
part time remain in the bottom two fifths of the income distribution 11 and this is likely to
be a factor in poor pension coverage. In a survey of One Parent Families’ membership,
63% of lone parents were not paying into a private pension, and 75% of this group cited
low income as the cause.12 Research confirms the link between low income and lack of
savings – relative to those in the middle fifth of the population those in the two lowest
income groups were only half as likely to be saving for retirement. As the PPI conclude
in their report on the “Under Pensioned", low earning are the most important cause of
low pension income.13

Carers
Like parents, carers’ labour market participation may be much lower than the general
population, with earnings limited by the need to fit caring arrangements around short
hours of work. There is a strong gender divide – 47% of men, but only 16% of women
caring in excess of 20 hours a week worked full time, and 7% of men and 26% of
7
  Wendy Olsen (University of Manchester)and Sylvia Walby (University of Leeds) Modelling Gender Pay
Gaps, EOC Working Paper 2004
8
  http://www.womenandequalityunit.gov.uk/research/factsheets/equal_pay_nov_2003.doc
9
  Age Concern and Fawcett Society (2003) One in four Age Concern
10
   Information supplied by One Parent Families – original source DWP August 2004 from the FRS
2002/03)
11
   Information provided by One Parent Families from DWP statistics (2004)
12
   Kempson E and McKay S (2003) Information provided by One Parent Families.
13
   http://www.pensionspolicyinstitute.org.uk/uploadeddocuments/The_Under-pensioned_27Nov03.pdf
                                                                                                  12
women worked part time. It has been estimated that reduced earnings may lead to a
possible 'carer pay gap' of twelve per cent14.

Low employment rates and low earnings inevitably reduce the capacity of carers to
contribute to occupational, personal or stakeholder pensions. But this is compounded by
the substantially higher costs compared with the general population, related to their
caring responsibility and the additional needs of the person for whom they are caring. A
2003 survey of 2000 parents of disabled children in the UK15 found that over a half of all
respondents experienced financial problems, the vast majority linked to having a
disabled child.

More recent research16 found that families with severely disabled children earn less
than other families and spend more. The average income was found to be £15,270 but
spending was £21,980, compared to the UK average of £19,968 and £19,970
respectively. Additional food and transport costs are some of the factors for this near
£7000 shortfall. Families with disabled children are more likely to be in debt than
families without disabled children, with mortgage and rent arrears being much higher
than in the general population17.
The outcome is that pension savings are low. Pension contributions of families with
severely disabled children were found to be, on average, £15 per month less than the
pension payment of the average UK family18.

Carers and employment

The right to request flexible working needs to be available to carers and parents of
children over 6 the better to enable them to combine work and caring and thus
increasing their opportunities to save for their own pension. We welcome the Pensions
Commission support for extending flexible working.

Carers (Equal Opportunities) Act opens the path for more carers to combine
employment with caring, because for the first time, Local Authorities will have duty to
support carers into education, training and employment. But to make this a reality, the
impact of caring on employment needs to be recognised in the same way that it is for
parents and for those who are themselves disabled. In particular, eligibility for
working tax credit should be available for those caring at least 16 hours a week to
bring into line with parents, not 30 hours, as is currently the case.


More services are needed if carers are to be able to be in employment. At present
domiciliary care is concentrated on those who need most help (in many cases without
any relatives to help support) because of the need to reduce 'bed-blocking' in hospitals.




14
   Marilyn Howard op cit.
15
   Contact a Family (2003) No Time for Us
16
   Family Fund How do they Manage?
17
   Family Fund in collaboration with Contact a Family Debt and disability
18
   ibid
                                                                                       13
The proportion of contact hours going to households with ‘low levels’ of need has fallen
from 42% to 17% in 10 years.19

Wider employment measures
The 2004 Pre-Budget Report announced pilot schemes for mothers seeking to return to
employment. These will include integrated programmes of support to provide women
returners with career advice, access to training, work placements and good quality
affordable childcare. These measures are welcome, but need to be extended explicitly
to all parents and carers, whether male or female, underpinned by adequate funding for
flexible and quality care services to support carers.

Early withdrawal from the labour market is associated with lower incomes and poorer
pension prospects because of gaps in state pension accrual and reduced ability to save
in private schemes. We appreciate the Government is keen to promote labour market
participation amongst the over fifties. To enable older people to participate in the labour
market, more effective measures will be needed to combat discrimination on grounds of
disability and age discrimination.

        iii.   The age of retirement

Recommendations

      We recommend that in its future work the Pensions Commission should
       assess the likely impact of any increase in retirement age upon carers,
       those they care for, and the net cost implications for the Government of a
       reduction in the number of available carers arising from any proposed
       changes to retirement policy.

      More support is needed to enable parents and carers to take up paid
       employment.

Your report highlights the impact of forthcoming demographic changes upon society and
the need for public policy changes to manage the rapidly rising size of the older
population relative to the working population. We are concerned at the suggestion that
the response to the demographic challenge "should include a rise in the average age of
retirement" without there first being careful consideration of the wider impacts this might
have. The potential impact of rising retirement ages upon carers, and those being cared
for is not adequately addressed in the report, nor the potential costs to the state of
providing alternative care services as more carers work for longer. Nor does it recognise
the extent of caring of children undertaken by grandparents.

Incidence of caring
According to the 2001 census, there are 6 million carers in the UK's adult population of
48mn. Roughly 12% of adults have caring responsibilities for a disabled or elderly
person. The incidence of caring is most concentrated incidence in the fifties to sixties
age group:

19
  Information provided by Hilary Land, Emeritus Professor and Senior Research Fellow of the School for
Policy Studies, Bristol University.
                                                                                                    14
        more than one in five people aged 50-59 in the UK are providing some unpaid
         care - about one in four women (24%) in this age group - compared to 17.9% of
         men
        in England and Wales the highest proportion of carers is in the 55-59 age group
         (23.5% of that population) and the highest number of carers is in the 50-54 age
         group (21.1% of that population)
        in Scotland the highest proportion of carers is in the 55-59 age group (18.8% of
         that population)

The heaviest commitments in terms of hours per week caring are also concentrated in
the fifties age group. More than half of the people providing 50 or more hours of care
per week are over the age of 55.

The earlier ONS survey of carers in 2000 found that 40% of 45-64 year old carers
spend at least 20 hours a week caring, a far larger number undertaking moderate
amounts of care than in other age groups. The over 65s also undertake substantial
amounts of caring, with 28% of carers in the 65 and over age group spend at least 20
hours a week caring20.

Women are more likely to be carers in all age groups under 65, the difference being
most marked in the 45-65 age group, where 27% of women are carers compared with
19% of men. However, among those aged 65 and over, men were slightly more likely
than women to care for someone – 18% of men compared with 15% of women.

Over a lifetime, 7 out of 10 women will become carers at some stage and nearly 6 out of
10 men21. Caring could therefore affect, to a greater or lesser extent, the ability of
a significant proportion of adults of working age to save toward their retirement
pension. Discouraging early retirement may also hit hard those who need to leave work
because of caring responsibilities, particularly given the low level of Carers’s Allowance.
Carers may feel they have no choice but to continue working, leading to a
corresponding increase in the demand for care services and residential provision, the
costs of which may fall upon the state.

Contribution to society
Carers make a vital contribution to society. 70% of the care of disabled and older
people is undertaken voluntarily by family and friends, only 30% by paid care workers.
Estimates of the economic value of unpaid adult care work in the UK range between
£13.9 and £57.37 billion a year. A 10 cent drop in the numbers of carers would result in
health and social service spending rising by one third22. Savings to the public purse
through encouraging later retirement could be more than off-set than the additional
demands on state-supported care services to meet care needs. Much better support
services would also be needed for carers to continue working to build their pension
entitlement.



20
   ONS Carers 2000 Results from the carers module of the General Household Survey 2000
21
   Carers UK It could be You op cit
22
   David Darton Tackling UK poverty and disadvantage in the twenty first century JRF
                                                                                         15
And in the future

It is anticipated that many more people will have caring responsibilities than now. The
demographic challenge will not only affect the pensions spend, but also the care spend
and individuals’ need for care. By 2014 there will be more people over 65 than under
16. Half of carers currently provide care to someone over the age of seventy-five.
The ageing of the population over the next twenty to thirty years is likely to have an
impact; within thirty-five to forty years there could be an increase of nearly sixty per cent
in the demand for support from carers. Carers UK estimate that the number of carers
will have to rise to 9.1 million by 2037 to meet the needs of the increasing number of
elderly people23.

Demand is also likely to increase following a Government commitment, made a year
ago, “To offer all adult patients nearing the end of life, regardless of their diagnosis, the
same access to high quality palliative care so that they can choose if they wish to die at
home”24. Research25 shows that the majority of people would like to be given the
chance to die in their own homes. But for many, this is dependent on family members
being available to support them there. Any moves to raise retirement ages could force
more carers into the workplace at a time when they are most needed by a family
member, preventing them from being in the home to take care of a family member
during the last days of life. It could also have a knock-on effect on people’s ability to die
in their place of choice.


Implications of rise in pension age:
Increasing retirement ages will not necessarily increase the numbers working because
of incidence of incapacity and caring responsibilities. The increase in women's state
pension age will mean that from 2010 women who reach the age of 60 will be expected
to be in the labour market. Lack of opportunity to retire may reduce capacity to care or
increase demand for alternative care services. It may also affect male carers. Men aged
over 60 not in employment can preserve their pension rights if they are not abroad for
more than half the year or self-employed. This concession may be removed after
women's state pension age is equalised. More men will face difficulties managing work
and care responsibilities, as the incidence of men's care responsibilities rises with age.
Whereas women have a fifty-fifty chance of having substantial caring responsibilities by
the time they are 59, men have the same chance by the time they are 74 26. A greater
proportion of men within the working population will be affected by caring
responsibilities if retirement ages rise.


Grandparents
Older people make a very large contribution to society. In addition to the high volume of
caring of elderly or disabled adults, older people play a very significant role in the care
of their grandchildren. Grandparents are widely used to provide childcare by parents,

23
   ibid
24
   Building on the Best: Choice, Responsiveness and Equity in the NHS, December 2003
25
   Priorities and preferences for end of life care in England and Wales. National Council for Hospice and
Specialist Palliative Care Services, July 2003.
26
   Carers UK It could be you op cit.
                                                                                                        16
particularly when their children are very young – 70% of parents use only
grandparents to support their childcare arrangements when their children are
under one27, and 58% of all families had used a grandparent’s care in the previous
year28. The Labour Force survey shows that 34% of employed mothers depend to a
greater or lesser extent on a grandparent29. Recently published research found that
18% of grandmothers in their fifties were providing childcare on at least three days a
week30. Black and minority ethnic families are particularly likely to use grandparents or
other relatives to look after children. Grandparents in these communities are particularly
valued because they provide appropriate cultural care and are able to contribute to
children’s learning.31 Age Concern has estimated that the economic value of the care
undertaken by grandparents is £3.9 billion a year32.

Wider issues

Recommendations

We would encourage the Pensions Commission to:
   Look at solutions which include those already retired – valuing the
     contribution they have made before HRP was introduced, and the
     contribution many older people are continuing to make to society

      Examine the case for carers to receive Carer’s Allowance in addition to
       their state pension and for providing a carer's premium for those receiving
       Pensions Credit

Carer’s Allowance
A particular grievance that affects carers who have reached state pension age but
whose caring responsibilities continue, is that they no longer receive carer's allowance,
unless their state pension entitlement is lower than Carer's Allowance.

When it was first introduced, Carer’s Allowance (at the time called Invalid Care
Allowance) was intended as a benefit to replace earnings. It is payable if earnings are
less than the lower earnings limit, and is not means-tested. At the time of its
introduction, receipt of the state retirement pension was subject to an earnings rule, so
there was logic to the application of the overlapping benefits rule, which precluded
receipt of both the state retirement pension and Carer’s Allowance. However, the
earnings rule for the state retirement pension was abolished in the early 1990s so the
pension can be claimed once state pension age has been reached, even if the recipient
continues to receive earnings from employment. Following this logic, carers who are
unable to earn from employment should be eligible to receive both their state retirement
pension and Carer’s Allowance, particularly as Government wants to encourage the
principle of working beyond State Pension Age. The limit on earnings could continue to
apply to the Carer’s Allowance. The problems of poverty in retirement for carers could

27
   Shirley Dex, Circumstances in the first year of life JRF
28
   DfES latest surve
29
   Social Trends, 2004, p128
30
   Clarke and Roberts, 2004
31
   Goldsmiths College – the role of grandparents in children’s learning
32
   Age Concern The Economic Contribution of Older People
                                                                                       17
be in part off-set if Carer's Allowance was payable on top of the state retirement
pension.

There are similar problems with Income Support – the Carer's premium payable with
Income Support also stops at state pension age, and there is no equivalent premium in
the Pensions Credit system to assist with the additional costs incurred by being a carer.




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