The Motherhood Penalty

Posted: Sunday February 6 2022

By: Abbie Coleman

There is a trend now for women to leave motherhood until their thirties when their career is more established.



By Lisa Vaughan of Lisa Vaughan Financial Planning

There is a trend now for women to leave motherhood until their thirties when their career is more established.

Apart from the initial outlay for a baby and costs of bringing up a child, there are also some hidden costs that women should consider.


New mums may suffer a loss of earnings just by taking time out of work to have a baby.

This loss will depend on their maternity package and length of maternity leave.  Many women also choose to extend their leave for an unpaid period beyond their employer’s contracted maternity package.


Taking a 5-year career break to raise children can mean a 35% smaller pension pot. (1)

Taking time out of work may affect women in the longer term as it may also mean that they and their employer will be making lower contributions towards their pension during this period.  Employers are not obliged to pay a contribution towards pensions beyond 39 weeks of maternity leave, so contributions may stop if maternity leave is extended beyond this point.  There may also be a temptation for women to stop paying their own pension contribution all together to make maternity leave more affordable.


The average cost of a part-time nursery place is £6,800 per year. This would be even higher in London. (2)

The rising cost of childcare may mean that it is not affordable for mum to go back to the same job or the same working hours, or even go back to work at all. A reduction in hours will not only effect earnings, but it is also likely to affect the amount being paid into pension and ultimately the amount being saved for their future.

Earning Power

When a woman does decide to return to work, there may be a hidden cost in earning power.

Generally, 42% of women claim that they earn less now compared to when they went on a career break. (3)

This is not to suggest that women do not give up work after having children, but it is important for women to be aware of how this might impact their long-term financial future.

What positive steps can women take?

It is important to talk to your partner about money and any concerns you may have and make financial decisions together.

At the very least, opt into a workplace pension scheme if you have one.

Don’t feel selfish saving your money rather than spending it on family.  By saving money now, you will be investing in their future too!

Think about financial planning in the same way you think about eating well or keeping fit.  A preventative measure for your future.  Something to consistently work at during your life.

Ask more questions, do your own research, or ask a professional.


Lisa Vaughan FPFS

Chartered Financial Planner

Lisa Vaughan Financial Planning Ltd


1 Scottish Widows, Women & Retirement Report 2019

2 Family and Childcare Trust 2020

3 The Confidence Gap Report 2019 Tech Pixies and One Poll 2019
* The survey went to 100 working women aged 34 to 54 from the UK during a two-week period in Oct/Nov 2018

Lisa Vaughan Financial Planning Ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website

# Motherhood Penalty