The UK pension system is built on the recognition of paid work, most clearly in private pensions where contributions are paid from earnings, and outcomes depend on how much and how consistently someone has been paid over time. The state pension recognises some time out of work, but in a more limited and separate way. Overall, paid employment sits at the centre of how pension outcomes are built. This is a design choice, not something inevitable.
Caring for children or adults, managing ill health, and other forms of unpaid activity all have value; they shape lives and enable others to work, but they are only partially recognised. In private pensions, these periods often mean lower or no contributions.
Sweden shows that this recognition can be embedded in the state and private pension system. You still build a pension based on what you earn, but the system does not stop when you are not working. If you take time off to look after a child, are unwell, or studying, the state pension system still treats you as if you have an income for pension purposes.
During parental leave, parents can take up to 480 days off work. Most of that time is paid at about 78% of previous earnings, with some days paid at a lower flat rate. That income counts towards the state pension, and the system also adds extra pension support for the parent with lower earnings, recognising that they are more likely to step back from work to care for children.
Sweden also embeds protection in private pensions through collective agreements that continue pension contributions during parental leave, with the amount varying by scheme and typically paid by the employer.
This policy does not remove the link between pensions and economic activity, but it recognises that people contribute in different ways and that some people face greater constraints on their ability to earn.
There are trade-offs in extending this approach to UK private pensions. Recognising periods outside paid work would have a cost; contributions would need to be paid when earnings are lower or not there, and it would require decisions about whether that cost sits with employers, the state, or both. It would add complexity, and rules on when contributions continue and how they are calculated would need to be decided.
This policy does not remove all intra-household differences; in Sweden, mothers still take more leave than fathers – in 2021, mothers took an average of 80 days and fathers 39 days.
However, we need to recognise that the current UK approach is a design choice. Private pensions largely recognise paid work and little else. That means that normal life experiences, such as time spent caring, dealing with ill health, or moving in and out of work, lead to lower private pension saving, and those differences build up over time.
The main point is that this is not fixed. The UK already recognises these issues in the state pension. The question is whether private pensions should continue to sit apart from that, or whether they should reflect a a more holistic view of people’s lives.
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