CAREER mothers can lose up to €200,000 in pension funds.
That is the impact that a five-year career break can have, as it will leave a woman with up to one-third less in pension funds, according to Samantha McConnell of IFG Corporate Pensions.
"Many women in the Irish workforce are simply not aware of the long-term financial impact that having a family will have on their retirement provisions," Ms McConnell says.
"In our experience, couples, when making decisions regarding leaving the workforce for a period of time to concentrate on a family, do not give enough consideration to what effect this career break will have on the stay-at-home spouse, who is, for the most part, the woman."
Ms McConnell and the team at IFG ran some real-life comparison models to quantify the effect and found that women fared even worse than was assumed.
The study looked at the effect of absence from the workforce on a typical pension fund.
The results revealed that a typical mother who decides to stay at home for five years from age 35 to 40 would end up with a pension fund worth €194,316 less than if she had uninterrupted service, when she finally retires at 68.
"This reduction of almost one-third of their target pension fund seems a lot considering that this worker was only away from the workplace for a relatively short percentage of her overall working life," Ms McConnell said.
There is a variety of factors that can hinder growth of a woman's pension fund.
These needed to be considered when deciding on contribution rates and other pension fund choices, the pensions expert added.
As mentioned above, career interruption is one such factor, as many women take breaks when their children are young, with the period out of the workforce typically varying from five to 15 years. This will have a huge effect on the amount they and their employer contribute to their pension on returning to the workforce, Ms McConnell said.
Also, after returning to work, a woman's period of service up to retirement age will probably be shorter as the pressure of dual roles takes its toll.
This shorter period, combined with the career break, will inevitably result in an even lower fund than reported in the study.
It is also worth noting that 45pc of all Irish women aged 15 to 64 are not officially in the workforce.
This means they have no official earnings, according to data from the Central Statistics Office.
"Due to the largely fragmented career path of many women and the impact this has on their pension fund, it is imperative that women give greater consideration to their pension and their longer-term finances," Ms McConnell said.
The crux of the matter is that women actually need more money than their male partners at retirement.
This is because longevity statistics indicate that women who reach retirement age can expect to live until 88, compared with men's life expectancy of 85.
"Our advice to women who take time out for their children would be to ensure they fully understand the implications of their decision and, where possible, put in place provisions that will balance the long-term effects," Ms McConnell said.
If the spouse or partner of the woman continues to work and contribute to a pension, they both need to look at the single set of pension contributions as a joint investment in their joint retirement financial plan.