Don't put retirement planning on the backburner
Having little ones to look after can make it difficult to focus on anything else, but it’s important to remember your retirement goals. Our research found that the presence of children, particularly young ones unsurprisingly seems to suppress the propensity to think about retirement, and may cause some parents to defer retirement itself. If you’re planning to leave work for the next few years to raise your children, remember that you’re still entitled to basic rate tax relief on pension contributions, even as a non-taxpayer. That means for every £80 you, or your partner, is able to pay in to your pension, you’ll end up with £100 in your pension pot. The maximum you can pay in as a non-taxpayer is £2,880 a year, equivalent to £3,600 once tax relief is added.
Make sure you've signed up to claim Child Benefit
If you’ve got a child under 12 and are claiming Child Benefit, you’ll get National Insurance Credits towards your State Pension even if you’re not in paid work. That means that when it comes to claiming your State Pension, you’re still treated as having contributed. Lots of people opted out of claiming Child Benefit following the introduction of the ‘High Income Child Benefit Tax Charge’ in January 2013. Under these rules, if one partner in a couple earns £60,000 per year or more, a tax charge is incurred which wipes out the value of the Child Benefit. However, it’s still essential to claim Child Benefit even if the charge does mean it’s clawed back, so that you can get the National Insurance Credits you’re entitled to.
Understanding your maternity leave and pension rights
If you’re planning to take maternity leave rather than stop work, your employer must continue to make contributions into your pension for the duration of your maternity leave. If you can afford to, you may be able to continue paying into your pension too while you’re off work. The Money Advice Service has lots more information on protecting your workplace pension after having a baby.
Check if you're eligible for government help with childcare
Once your child reaches the age of three, you may qualify for government help with your childcare costs. All children aged three and four in the UK qualify for some free childcare or early education, with amount varying depending on where you live. In England, for example, children this age are entitled to 570 hours of free childcare a year, equivalent to 15 hours each week for 38 weeks of the year, whereas in Wales they can get 10 hours of free early education a week for 38 weeks a year in a school or funded nursery. If government help with childcare costs frees up some extra cash, you might want to consider putting some of this into your retirement savings. You can check what help you might get with childcare costs using the government’s childcare calculator.