Mum’s the word on pension rewards apparently, and with Mothering Sunday being a day dedicated to showing our mothers how much we appreciate and love them for everything they do, this got us thinking about the sacrifices parents unwittingly make for their children.

Commentators suggest if stay-at-home mums were paid for the tasks they perform, such as; chef, driver, therapist, personal assistant, live-in nanny, tutor, house cleaner, private nurse and laundry/ironing operative, they would take home around £160,000 a year!

Mums who go back to work, often on a part-time or self-employed basis, have additional logistical hurdles to jump as they juggle their professional responsibilities with childcare, family-life and running the home.

For a new mum juggling these tasks with the pressures of raising a young family, it’s no surprise to find many do not have the time or inclination to address one crucial area; their future financial wellbeing. And while being a stay-at-home mum has many rewards, your pension is usually overlooked.

According to a report by Insuring Women’s Futures, career gaps to look after children followed by stints of temporary and part-time work can seriously damage your pension pot. The IWF says at age 69, the average man’s pension pot is valued at £179,091 while a woman’s is £35,800. Now that’s a worrying unintended sacrifice!

Even to get the full basic State Pension you currently need a minimum of 30 qualifying years of National Insurance contributions or credits. A significant gap could mean you miss out on the full amount, so it’s worth checking your National Insurance record online to keep tabs on how far off you are from 30 years of contributions, and remember you can buy back some years by making voluntary NI contributions. To check it you’ll need a Government Gateway account, which is easy to set up.

Lemonade Money appreciates the financial pressures having a family puts on savings, so here are a few tips to help you plan ahead and top up your pot:

  1. If you’re in a workplace pension scheme and about to start your maternity leave, don’t worry, your employer will continue to make contributions into your fund for the duration of your maternity leave. That will be for at least 39 weeks, and in some instances longer. If you can afford it, you might also be able to continue making contributions.
  2. If you’re a working mum, calculate the household outgoings with your partner and work out who’s paying what. If you find most of your salary is going on childcare costs and food bills etc, see if these can be shared out. Hopefully this will enable you to divert a proportion of your income (no matter how small) into a personal pension plan. By building up pension entitlement in your own name, you won’t have to rely on your employer’s pension scheme or your partner to bail you out in the future.
  3. If you’re a working mum earning under £10,000 a year, you won’t automatically be enrolled into your employer’s pension scheme, however you can still opt in and you may receive employer contributions.
  4. If you’re a self-employed mum, the chances are you’re ploughing any profits into the home or business, rather than a pension. HMRC however, does not tax your pension contributions so for 20% taxpayers, paying £80 from your taxed income into a pension will result in £100 being invested in the pot for you. For high rate tax payers, the same £100 investment will cost just £60.
  5. If you’re not working, see if the household finances can stretch to your partner paying part of their salary into a personal pension in your name. If you pay up to £2,880 into a personal pension per annum, the Treasury will increase it to £3,600. How? The pension provider claims this extra money – 20% tax relief – from HMRC.
  6. If you’re not entitled to child benefit due to your partner’s earnings, still claim the child benefit in your name as this will entitle you to credits toward the state pension. The child benefit you receive will then be recouped via your partner’s tax return.
  7. And speaking of credits, if are planning to go back to work after the birth of your child and grandparents or relatives are taking responsibility for your baby or toddler’s care, you can transfer your National Insurance credits across to them, boosting their State pension pot. Simply sign a National Insurance credit form and that family member will then receive credits for looking after your child.
  8. If the thought of going through your household budgets leaves you cold, Lemonade Money can help. Online tools make the process easy, there’s a free and quick financial health check so you can see where you’re at financially and if you need extra support, Lemonade Heroes can help you get your finances on track.

As many young mothers will agree, the onset of ‘baby brain’ means it’s easy to lose track of your pension and what you’ve accrued. According to the Government – who’s developing a Pensions Dashboard to keep records in one place – the average person will have worked for 11 employers by the time they retire. Having a single place to view your pension savings will help to ensure payouts don’t get lost.

The Department for Work & Pensions currently estimates there’s £400m in unclaimed savings, but with no definite date for the Dashboard launch it’s worth keeping paper records (where possible) until everything becomes digitised.

With the State pension age increasing to 67 from 2028 and rumours it could be 68 in 2044 and 70 after that, mums will have a long time to wait before they even pick up a basic payout. We think with Mothering Sunday looming it’s time to reward mums sooner and help build that pension pot now.