International Women’s Day: How tweaks to tax relief can ensure Gen Xers’ who leave the labour market to care are not left behind

By: Sophia Dimitriadis

In a previous blog in this series, we discussed how our recent research on the retirement prospects of Generation X (those born between 1965 and 1980), sponsored by Phoenix Group, revealed that Gen X women face particular challenges to saving for retirement – mainly due to the double burden of care they face. There we considered solutions, such as the need to provide more support to working carers in order to help them to balance the stresses of work and care.

Some people with caring responsibilities, however, may still need or want to take a career-break regardless of any changes to policy – with 14% of Gen X having done this already.

But can we actually support this group to build up their pension pots even when they aren’t working? Our analysis finds that a notable 1 in 5 Gen Xers who’ve taken a career break have no pension savings (compared to 14% overall) – while most of this group (76%) and those who’ve taken a career break to care for children specifically (90%) are women. As such, finding a solution is vital if we are to improve women’s retirement prospects.

One opportunity the government have is to allow individuals to share their annual allowance for pension contributions with another person who is unable to contribute to their own pension, perhaps due to caring responsibilities as well as other factors like poor health. This could help to incentivise, for instance, a carer’s spouse or family member to contribute to their pension to help them build up a pension in their name whilst they are unable to work. Although currently it is possible for a non-working spouse to contribute £2880 each year into a pension and benefit from 20 per cent tax relief, any further contributions would not qualify for tax relief. In contrast, individuals in work can contribute up to £40,000 and receive tax relief.

Such a policy change may be particularly important to protect a carer from being financially vulnerable in later life if they split from their partner. Gen Xers who’ve taken an extended career-break disproportionately expect to rely on a partner/family member in retirement while they have very little pension savings themselves.

Although for married couples, it is mandated that pension savings are included in a financial settlement in the event of a divorce or dissolution of a civil partnership, it is not required that they are shared equally and, in practice, this is not always considered in the divorce process – leading to unfair outcomes, especially to women. For couples who are not married, there are no legal requirements to consider pension savings you have not contributed to in the event of a separation. Our survey results support this notion – Gen Xers who have previously taken a career break to care for children and are separated or divorced are exceptionally likely to believe they’ll be solely reliant on the state pension in retirement (27% vs 8%) compared to those not in this group.

With the oldest Gen Xers retiring in just over a decade, and divorce on the increase in later life, policy makers will need to act fast to ensure that women, including those who’ve taken career-break to care, are not left behind.


The findings are ILC calculations based on nationally representative YouGov survey responses of 6035 UK adults aged 40-55 (collected online between 13 – 24 November 2020). Please note, the statistic of 1 in 3 Gen Xers being at significant risk of having inadequate incomes in later life is based on ILC’s own calculations. All references and methods are available in the full report.

The Slipping between the cracks: Retirement income prospects of Generation X report has been supported by Phoenix Group.

Sophia Dimitriadis

Research fellow, ILC-UK


Sophia joined the ILC in May 2019 as a Research Fellow.

Her work has mainly focussed on understanding the longevity economy, both in the UK and internationally, as well as exploring ways to boost individuals’ retirement prospects in the UK.

Prior to this, she worked as a policy and research officer for ASH Wales, working to inform and influence the tobacco control policy agenda in Wales. Before working at ASH Wales, Sophia worked as a social researcher for the Office for National Statistics, where she worked on publishing statistical releases on key health measures. Sophia has a BSc in Politics, Philosophy and Economics from the University of Warwick and an MSc in Economics from the University of Nottingham.