Grandmother with grandchild sitting on the floor of a library with a book for reading
Help from grandma is part of balancing the back-to-work budget after parental leave ends © Getty Images

This article is part of the FT’s Financial Literacy and Inclusion Campaign

Just when you thought your child-rearing years were behind you, the UK’s childcare crisis comes along to take another bite out of the more mature woman’s retirement prospects.

The rising cost and worsening availability of childcare options for working parents means more and more grannies are acting as unpaid nannies to their grandchildren.

Many do so willingly — and grandparents lending a hand is nothing new. I have fond memories of being packed off to stay with my Grandma and Great Aunt for half-term holidays, where, among other things, I was taught to play gin rummy and do crosswords.

But this is no longer an ad hoc arrangement; it is a vital part of balancing the back-to-work budget.

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More than half of grandparents now care for their grandchildren during the working week, according to SunLife, the over-50s insurance specialist.

Try to arrange to meet friends of a certain age, and you will soon find out which are their “days” for providing full-time care or collecting the grandkids from school. Any teacher will tell you that grandparents are an increasingly common sight at the school gates.

Of course, this does not just affect women. Grandpas are involved too: my own parents were enthusiastic joint carers to my brother’s twins for many years.

But data from Age UK shows that, while men and women are equally likely to retire early from the workplace, women are nearly three times more likely to have done so to provide care for a family member (14 per cent of female early retirees, compared with 5 per cent of men). Nor does this reflect the number of older women who are reducing their hours or going part-time to square the childcare circle (I can’t quote you official data but, from my own experience, this is also rife).

And members of the so-called “sandwich generation” may also have to help look after their grandchildren’s ageing great grandparents.

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The danger is that this will compound the sizeable gender pay and gender pensions gap that millions of women are already grappling with.

In total, SunLife estimates grandparent care is saving working families in the UK a whopping £96bn a year in childcare costs.

“A lot of grandparents are doing this to make sure their adult children can work full-time and can earn the money to pay the mortgage,” says Clare Moffat, pensions and legal expert at Royal London. “But, if you stop work or reduce your hours, what impact is that going to have on your retirement?”

Another way of putting a price on this freely given care is to calculate your “Grandparent Salary” on SunLife’s website. Key in the number of hours you typically act as childcare provider, chauffeur, chef, cleaner, nurse or private tutor to your grandchildren and the answer — based on what the professional equivalent would cost — may surprise you. SunLife says the average grandparent is giving labour worth more than £13,000 a year. Might this be contributing to the UK’s productivity puzzle?

Just as “free” grandparent care carries hidden costs, any working parent will also tell you there is no such thing as “free” childcare hours.

I’ve written before about the mathematical gymnastics that UK nurseries have to undertake to cover the cost of providing “free” hours (only available during term time) as the government subsidy covers a fraction of the cost. They often end up having to charge higher rates for certain paid-for hours, or impose an array of top-up fees.

Every day, I hear from FT-reading parents who are dismayed to find the extra “free” hours of childcare announced one year ago at the March Budget will not make a material difference to their family finances.

“Most people can’t afford to send their children to private school, but are somehow expected to afford it for their toddlers,” one recently commented.

A recent survey by UK campaign group Pregnant Then Screwed found that one-third of parents eligible for the new childcare funding hours were still considering leaving their jobs, or reducing work hours, due to rising childcare costs. Nearly three-quarters of parents said their childcare provider had increased, or was about to increase, its fees.

Having recently become grandparents to twins, my husband and I are helping in a different way by providing money towards childcare so my stepdaughter can keep working full-time in her profession.

We see this as an investment in her future job prospects and earnings trajectory. I don’t want her career moving on to what is dubiously called the “mummy track”. But nor do I want to cut my own hours and move on to the emerging “granny track”.

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