Labour’s plans to reduce migration by cracking down on migrant workers in the caregiving industry Experts caution that this could lead to substantial impacts on individuals' pensions, as the gender pension gap might widen further.
Top pensions specialists have voiced worry about the government's proposals. block workers from abroad From addressing Britain’s 100,000 care vacancies, it was noted that taking time off to look after relatives might result in considerable economic inaction and many individuals losing out on contributions to their pensions.
A significant portion of unpaid caregiving is undertaken by women, which often leads them to quit their jobs and decrease savings for retirement. This issue might intensify as fewer workers opt into an already overburdened field.
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Steve Webb, a partner at pension consultancy firm LCP and previously the pensions minister from 2010 to 2015, stated that these modifications would probably lead individuals needing to finance their own long-term care.
He said: “The care The sector is already facing significant stress due to a large number of vacant positions. Should the restriction on migrant workers lead to providers needing to offer higher wages to attract British caregivers, this could potentially raise the cost of care services and diminish availability.
Poorly financed local governments may further limit publicly supported care, leading to an increase in elderly and vulnerable individuals needing to cover their own expenses for assistance.
When pension savings frequently fall short of covering everyday expenses, individuals needing to finance their own care will probably encounter significant financial strain.
Women might encounter an even larger gap in their pension savings.
Lisa Picardo, who holds the position of chief business officer for the UK at PensionBee, has stated that increased care expenses might compel individuals to reduce their pension payments, thereby jeopardising their future financial stability.
numerous individuals of working age might similarly experience heightened financial strain as they do aim to assist older family members "While they save for their own retirement," she mentioned.
Research conducted by PensionBee indicates that every year away from employment because of caregiving duties could decrease a pension fund by approximately £5,000 on average.
Picardo commented, "Each year spent working part-time rather than full-time could result in an approximate shortfall of £2,000 in one's pension fund on average. This highlights how taking time away from the workforce can significantly impact financial security in later life."
Sara Benwell, who serves as a pensions editor and consumer specialist, indicated that these extra expenses might push more households towards taking up unpaid caregiving duties, with women potentially being particularly compelled to leave their jobs.
She stated, "Although improving conditions for caregivers is certainly positive, it will lead to increased operational expenses. These additional costs will ultimately be transferred to customers through higher charges. This situation might have devastating consequences for households."
Increased expenses for British employees
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Melanie Weatherley from the Care Association Alliance aims to contest the idea that foreign caregivers are imported merely as "inexpensive labor."
She stated: "On the contrary, the numerous overseas professionals working in our care system possess exceptional skills."
To attract British workers to pursue a career in caregiving, it’s essential to acknowledge the significance of caregivers by providing appropriate compensation, working conditions, and training.
Boosting the wages of caregivers necessitates additional funding from local councils and the NHS.
Tough choices for Labour
Employers have previously cautioned about the outcomes of Rachel Reeves’s increase in national insurance contributions, which were introduced in October and implemented in April.
Rachel Vahey, who leads public policy at AJ Bell, stated that additional economic strains on businesses will lead to close examination of every aspect of employee compensation.
She stated, "The care providers will closely examine the advantages they extend to their staff members, such as the pension contributions. As a result, one possible scenario might involve maintaining these provisions at just the legally required levels instead of providing more favorable terms to their workforce."
Vahey additionally cautioned that Britain’s immigrant community significantly influences the broader future of the state pension system.
As birth rates decline and the baby boomer cohort enters retirement, the dependency ratio — which measures the proportion of those receiving pensions relative to working-age individuals — is increasing dramatically. This shift imposes a heavier responsibility on the current workforce to sustain retired populations.
“As the state pension gets progressively nearer to the capped individual allowance, we might soon reach a critical juncture where we must tackle the issue of what level of support the state pension ought to provide, at which age, and how we can ensure these payouts grow sustainably annually.”
The Labour Party has been reached out to for their input.
