Switching from full-time work to working part-time 3 days a week could lead to £119,000 less in retirement, according to Standard Life.
A recent study from Standard Life has underlined the disadvantages part-time workers have while saving for retirement in terms of pensions. According to the data, those who worked three days a week for an extended period of time were up to £119,000 worse off when they retired.
There is a significant pension penalty even if you go from full-time to part-time for a shorter term of 10 years. Between the ages of 35 and 45, individuals who work full time will amass £44,400, whereas those who work three or four days would amass £26,600 and £35,500 over the course of ten years, respectively. This is a difference of approximately £18,000 between full-time work and working three days per week.
The percentage of persons who work part-time varies significantly based on social criteria including gender and race, according to data from the UK government. Part-time employment represents 23 per cent of all employment.
A separate survey by Phoenix Insights found that 32 per cent of women cut their working hours for a lengthy period of time, which lowers their earning potential and, consequently, their retirement savings.
Standard Life head of workplace proposition Neil Hugh says: “Making the decision to switch from full-time work to part-time work is a significant one and is often triggered by life events like having a child. The decision has an obvious short-term impact on people’s take home pay but the longer-term consequences for their retirement plans are often overlooked.
“The reality is that women are more than three times as likely as men to work part-time and it will often be women that have to think more carefully about whether they are on track for the retirement they want.
“At the Spring Budget the Chancellor announced that from September 2025 all working parents in England of children aged from 9 months will be able to access 30 hours free childcare a week, which should help those who want to stay in full-time work do so, however having children is just one of many reasons for the gender disparity – others include women taking on more caring responsibilities for adults and cultural norms in some parts of society.”
“There are steps people can take to minimise the impact part-time work can have on long-term finances. For example, it’s important to make sure you’re taking advantage of all the benefits that your pension plan offers. If your employer offers a matching scheme, and you can afford to do so, it’s worth making additional contributions so that your employer will match them.
“Additionally, if you have a partner, consider your retirement plans in terms of a household and the impact of working part-time could become less of an issue if you agree as a couple that one person will make additional provision.”