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Why carers are missing out on retirement savings

A gap in Australia's super system leaves carers worse off.

Last updated: 17 May 2021


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • More than two million Australians are unpaid carers. They receive no superannuation for this work
  • Some other nations pay carer's credits to boost the retirement savings of those working as unpaid carers
  • Carers say that carer's credits could help them financially and recognise their hard work

The majority of Australia's two million carers are women. Many are forced to abandon careers to take up caring. Yet they receive no super for this often demanding work, despite saving the Australian economy billions. Caring can also take a huge toll on a person's mental and physical health.

The most common age group for carers is the 45–64 age bracket, with almost 40% of carers being in this age range. This means that carers are taking time out of paid work in what's normally the highest earning stretch of a person's working life. It follows that they'd normally earn their highest super contributions during this time.

So what can be done? We look into the experience of one carer, Sally, and see what help other countries give unpaid carers to see if they could serve as a model for Australia.

Sally's story: Caring for her daughter has taken a toll

Sally* is one of more than 800,000 Australians working as a primary carer. She looks after her teenage daughter, who has mitochondrial disease.

'Mito', as it is sometimes known, is a complex and debilitating condition that plays havoc with mitochondria, which generate energy for almost all of the cells the human body needs to function properly.

Caring is very much a 24/7 job for Sally and the toll is immense

Mito Foundation writes that the disease "affects not only the person with the illness but carers and family as well". It further notes that "carers and family may even be in need of their own support, support they might have to continuously fight for".

Sally often needs to travel to Sydney to see specialists for her daughter's condition. There are also frequent phone calls to doctors. Caring is very much a 24/7 job for her and the toll is immense. 

"These conditions keep on changing," Sally says. "There's not a lot of predictability with her condition. I feel like I'm always on a steep learning curve."

* Not her real name.

Carers like Sally save the nation billions

Carers are often associated with looking after children, but also include those who provide unpaid support to family and friends with disability, mental illness, chronic conditions and the frail aged.

Carers Australia puts the number of unpaid carers nationwide at 2.65 million. Some may take a short career break to care for a loved one. For others, it's a commitment that lasts years.

Most unpaid carers are women

The majority of these unpaid carers are women. Australian Bureau of Statistics reports that seven in ten primary carers are women. The gender divide is even more stark in terms of primary carer's leave, with 93.5% of this leave taken by women.

Their work is often physically and mentally demanding and it saves the country a staggering amount of money. A 2020 report by Deloitte estimated that carers in Australia do more than 2 billion hours of work in a year and the total cost to replace their work would be $77.9 billion.

Life as a carer

It's a responsibility that takes a toll on almost every aspect of Sally's life. "It's extremely stressful," she says. "It impacts your mental health. My marriage broke down – it puts an enormous amount of pressure on your relationship. 

"It's really increased my social isolation. That's been a big thing for me… it's also had a big impact on my physical health."

My marriage broke down – caring puts an enormous amount of pressure on your relationship

Sally, unpaid carer

Before working as a carer, Sally gained a number of degrees and worked as a caseworker. Like many carers, she had to leave a job she loved because of the time demands of caring for someone.

"I've got a really good education, and the self-identity issue has been very big," she reflects. "To have to not work has been really bad for my hip pocket but also for my sense of self."

Carers missing out on retirement savings

While the work done by carers is clearly good for society and the economy, being a carer can be disastrous for a person's retirement savings.

Carers may be entitled to Carer Payment and Carer Allowance.

The Payment provides income support for carers unable to do substantial paid employment because of the demands of caring. Currently, the maximum fortnightly basic rates are $868.30 for a single and $654.50 each for a couple. Carers may also be eligible for a small pension and or energy supplement.

Being a carer can be disastrous for a person's retirement savings

Carers who provide care for someone with a severe medical condition or disability in a private home may also be entitled to the Allowance, which is currently $131.90 a fortnight for someone over 16 or a high needs child under 16. A carer for a lower needs child under 16 only gets a Health Care Card for the child.

People receiving Carer Payment or Allowance don't get any super paid on this money.

Other countries have introduced carer's credits

Policy experts say there is little recognition for the contributions made by carers.

"The value of unpaid care, particularly care for adults, is massive and is disproportionately done by women," says Emma Dawson, executive director of think tank Per Capita. 

"It saves our community a lot of money that would otherwise be spent on professional or institutional care, yet we ask those women who've spent their lives caring for others to retire in poverty."

'Sounds pretty fair to me'

The situation is different in some other countries, including the UK, Sweden and Germany, that provide carer's credits (payments to retirement savings) to carers. These payments help offset the impact that time out of the paid workforce has on a person's nest egg.

Peter Strong, CEO of the Council of Small Business of Australia, says the credits sound like a good idea.

"We haven't got a policy on that, but personally I don't have a problem with carer's credits," he says."The taxpayer is saving money by the carers looking after someone, so giving them credit for that sounds pretty fair to me." 

Did the Retirement Income Review look into carer's credits?

In its submission to the Retirement Income Review, Super Consumers Australia recommended that the review calculate the impact of paying superannuation on various forms of carer's leave. 

We argued that this was important as these additional super payments could help reduce the gender imbalance in retirement savings. 

The review didn't take up our suggestion to get a better understanding of how carer's credits could work in Australia.

Instead, in a very brief discussion of carer's credit schemes, the review merely noted that the countries that have these credits in place have different retirement income systems to Australia. This means that any carer credit scheme paid through super would "need to be adapted" to work here.

It's disappointing that the Review didn't provide us with an evidence base on the value of carer's credits for superannuation

Xavier O'Halloran, director of Super Consumers Australia

But Dawson says carers credits should be back on the agenda. "(These credits) are something we need to urgently look at if we're going to use (the Retirement Income Review report) as a springboard for meaningful policy change". 

"It's disappointing that the Review didn't provide us with an evidence base on the value of carer's credits for superannuation," says Xavier O'Halloran, director of Super Consumers Australia.

"We know this is a significant source of unfairness in Australia's retirement system".

Way back in 2013, the Australian Human Rights Commission called for the Productivity Commission to work out the impact of carer's credits.

Sally: Carer's credits 'would be a huge thing'

Sally's ability to build up a nest egg has been rocked by her work as a carer. It's something she worries about when she looks to the future.

"It has a very bad impact on my retirement savings," she says.

"My ex is able to go to work and run his business, earn a lot of money and put his super away. I'm just sitting here with no income. I worry about the impact it's going to have on my children. Carers are working their absolute guts out, and they're not being paid."

Carer's credits would be a huge thing – not just having that extra money, but it would make carers feel much more valued


Sally says the introduction of carer's credits is a "great idea" that would help carers on a number of levels.

"It would be a huge thing – not just having that extra money, but it would make carers feel much more valued if there was a bit more financial recognition for the work they're doing."

O'Halloran says carer's credits need to be back on the government's agenda.

"To make our retirement system fairer, and to recognise the vital work done by carers like Sally, we need to look closer at these credits and how they could work in Australia."

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This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with CHOICE to advance and protect the interests of people in the Australian superannuation system.

Stock images: Getty, unless otherwise stated.