People who care for family members without charge take a big hit on their finances. This could last into retirement, as they are unable to balance their paid work and their caring obligations.
According to a recent analysis by the financial firm just Retirement, seven out of ten people receiving carer’s benefits are not working and therefore missing out on their earnings and private pension contributions.
A study conducted by Careers UK last year found that 40% had quit their jobs, and 22% had cut back on their hours.
Helen Walker, chief executive of Carers UK, says that for many unpaid caregivers in the workplace, the stress and challenges can lead to a reduction of working hours or even a complete exit from the workplace. This can have a major impact on household finances. The current cost of living is making it worse.
The party most likely to win the next election has not said much about how it will help the army of UK unpaid caregivers. Labour’s manifesto doesn’t mention the word “carer”. The Conservative manifesto makes a few short mentions. Liberal Democrats are the only ones who have made substantial proposals to improve support.
The weekly caregiver’s allowance now amounts to £81.90 for people who care for a disabled person at least 35 hours per week.
Since several years, Carers UK has conducted an annual survey asking people to consider the financial impact of their role. In the last year, 75% of people receiving carer’s allowance struggled with cost-of living pressures. Almost half cut back on essentials such as food and heating. In 2022, 39% of people said they struggled to make ends. Now, 45% say that.
According to the survey, 72% of respondents were concerned about financial burdens associated with caring for others, including petrol costs, hospital visits, heating, and dietary needs.
The strict rules governing the carer’s allowance forced those who were working to take low-paying jobs. Earnings limits mean that you cannot qualify for the allowance if you earn over £151 per week. According to The Guardian, Department for Work and Pensions has taken caretakers who inadvertently earn more to court.
Just Retirement and Carers UK say that this rule makes it difficult for people to remain in paid employment.
Walker says it is important to remove unnecessary pressures, as well as ensure that those who are able and willing to work for a living can do so.
She said that the low payment level doesn’t recognize the work of carers, and there are problems with the delivery of payments, which makes even small amounts of care challenging. It would be beneficial to increase the earning limit for carers in order to keep them working and avoid overpayments.
Stephen Lowe, from Just Retirement, says that the carer’s payment was never meant to be a wage or payment for caring. “However, we must question if it is suitable for its purpose if rules prevent or limit people from taking advantage of employment and earning opportunities available to them.”
He warns people that, if they restrict their work hours or stop working altogether to care for their loved ones, “this loss of income and work benefits, such as employer contributions to pensions, will likely have an impact on both their lives in the future, as well as businesses who lose their key staff.”
The Lib Dems have pledged to increase the carer’s benefit by £20 a weekly and introduce a new earnings taper of £183 after which the allowance would be reduced. Labour had previously stated that it would review, but did not include any details in its pledges.
Walker believes that the problems faced by working carers will not abate without better support.
She says that the last decade saw a rise in hours of unpaid childcare and a decrease in social care. Our YouGov survey revealed that 62% (or 10 million) UK adults, who are either current or former unpaid caregivers, said they had no other choice but to take on an unpaid caring position.
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