Impact of childcare breaks on pension entitlements

Impact of Childcare Breaks on Pension Entitlements

The 2025 edition of Pensions at a Glance reviews pension reforms implemented by OECD countries in the past two years. It features a dedicated chapter analyzing how childcare breaks affect pension rights.

Pension Reforms Overview

OECD countries have introduced multiple pension changes aiming to improve coverage, adequacy, and sustainability. Attention to periods spent on childcare is a significant aspect of recent reforms, recognizing the influence of career interruptions on future pension benefits.

Childcare Breaks and Pension Rights

Time taken off work to care for children often leads to gaps in pension contributions, potentially reducing retirement income. To address this, many countries have adjusted their pension systems to credit childcare periods, either fully or partially, in determining pension entitlements. These adjustments aim to balance fairness toward caregivers, predominantly women, while maintaining system sustainability.

"Recognizing childcare periods in pension calculations is essential to ensure equitable retirement outcomes, acknowledging the social value of caregiving roles."

Methods of Credit

Approaches vary by country but generally include:

Explicit pension credits for childcare years
Notional contributions or deemed earnings during childcare leave
Adjustments in eligibility rules or benefit calculations to offset career breaks

Challenges and Considerations

Balancing gender equality, fiscal sustainability, and adequacy of retirement income remains complex. Overly generous credits could strain pension budgets, while insufficient recognition perpetuates gender pension gaps.

Author's Summary:
Adjusting pension systems to credit childcare breaks is vital for fair retirement outcomes and gender equality, though countries must balance generosity with financial sustainability.

OECD — 2025-11-27