Savers moving from full-time work to a three-day week could be £119,000 worse off in retirement, analysis from Standard Life has revealed.

The research showed that someone that began working full-time with a salary of £25,000 per year and paid the standard monthly auto-enrolment contributions from age of 22, would amass a total retirement fund of £434,000 at the age of 66.

In contrast, switching to part-time via a three-day week from the age of 35 would result in a total pot of £315,000 at the age of 66, £119,000 less than if they remained working full-time.

The research showed that switching to part time for a shorter period of ten years also comes with a sizeable pension penalty, revealing that those working full time will accumulate £44,400 between age 35 and 45, while those working three or four days would accumulate £26,600 and £35,500 respectively over the ten-year period.

This marks an almost £18,000 difference between full-time work and three days a week.

Standard Life also noted that the move to part-time work is a greater consideration for certain groups, highlighting recent government data that revealed significant differences in the percentage of people who work part-time depending on social factors like gender and ethnicity.

In addition to this, it highlighted previous research from Phoenix Insights that revealed that 32 per cent of women reduce their working hours for an extended period of time, reducing their earning potential and therefore their retirement pot.

Standard Life head of workplace proposition, Neil Hugh, stated: “Making the decision to switch from full-time work to part-time work is a significant one and is often triggered by life events like having a child.

"The decision has an obvious short-term impact on people’s take-home pay but the longer-term consequences for their retirement plans are often overlooked.

“The reality is that women are more than three times as likely as men to work part-time and it will often be women that have to think more carefully about whether they are on track for the retirement they want.

“At the Spring Budget the Chancellor announced that from September 2025 all working parents in England of children aged from 9 months will be able to access 30 hours free childcare a week, which should help those who want to stay in full-time work do so, however having children is just one of many reasons for the gender disparity – others include women taking on more caring responsibilities for adults and cultural norms in some parts of society.

“There are steps people can take to minimise the impact part-time work can have on long-term finances.

"For example, it’s important to make sure you’re taking advantage of all the benefits that your pension plan offers. If your employer offers a matching scheme, and you can afford to do so, it’s worth making additional contributions so that your employer will match them.

“Additionally, if you have a partner, consider your retirement plans in terms of a household and the impact of working part-time could become less of an issue if you agree as a couple that one person will make additional provision."

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