New data from the ONS shows that having children leads to a substantial and long-lasting reduction in mothers’ earnings; five years after the birth of a first child, monthly earnings were reduced on average by 42%, or £1,051 per month, compared with earnings one year before the birth.
The total earnings loss over five years amounts to an average of £65,618 following the birth of a first child, £26,317 following the birth of a second child and £32,456 following the birth of a third child.
Part of this reduction in earnings is the result of a reduction in employment; the probability of paid employment was significantly reduced for five years after the birth of a first child, compared with one year before birth, with a peak reduction of 15.0 percentage points one and a half years after having a child.
Kelly Parsons, Head of Pension Proposition at leading independent consultancy Broadstone, commented: “Today’s data starkly illustrates the ‘mum tax’ that rises to more than £65,000 over a five-year period. The reality is that it is a financial straight jacket that continues to tighten years after childbirth.
“Losing more than £65,000 in earnings in just five years after a first child is a serious structural issue with long-term implications for gender pay equality, pension saving and economic growth.
“If we want to close the gender pay gap, we must move beyond acknowledging the motherhood penalty and start designing policies that dismantle it – from more affordable childcare and flexible working, to support that ensures women don’t pay the price of parenthood with their financial security.
“Beyond the immediate earnings loss, the ‘mum tax’ has a compounding effect on long-term financial wellbeing. Reduced pension contributions during early career years can significantly impact retirement outcomes.
“Financial education plays a critical role in helping women understand these implications and take proactive steps, whether through catch-up contributions, understanding employer schemes or leveraging flexible benefits. We must ensure women are equipped not just to navigate parenthood but to protect their financial futures.”
