As part of the RAISE Act, Congress directed the Department of Health and Human Services (HHS) to develop a national family caregiving strategy. The Government Accountability Office (GAO) helped the effort by researching “other countries’ efforts that could improve the retirement security of parental and spousal caregivers.”
The GAO issued the report on September 30, 2020.
The researchers first established the problems faced by family caregivers. They noted that family caregivers “may be financially vulnerable in retirement if, as a result of caregiving, they reduce their workforce participation, prematurely tap into retirement savings, or stop saving for retirement.” Although the GAO included other aspects of family caregiver support, the main focus of this research is effects on retirement savings for people who act as family caregivers.
The researchers chose three countries to explore: Australia, Germany and the United Kingdom. They focused on family caregivers providing eldercare, leaving childcare out of the scope of the report.
Here are the problems they identified for family caregivers:
- Reduced workforce participation lowers earnings and decreases or eliminates participation in retirement savings programs.
- High out-of-pocket expenses increase costs at a time of lower earning.
- Lower social security benefits. In the U.S., social security earnings are based on the highest 35 years of earning. Family caregivers often sacrifice some of their highest earning years to caregiving.
The document provides timelines for each of the three target countries, noting that all three have spent decades developing family caregiving policies.
The report distinguishes different types of policies.
First, Flexible Work and Leave Policies are noted as solutions that allow caregivers to maintain their attachments to the workforce. This helps them maintain earnings, cover higher caregiving costs and stay engaged in retirement planning.
Second, Income Support Policies help protect family caregiver’s retirement savings. The income can be paid directly to caregivers, or indirectly by paying the care recipient.
Third, Tax Credit Policies can help support family caregivers by reducing tax liability. In some cases, expenses related to caregiving can be deducted from taxable income.
Fourth, Pension Support Policies protect a family caregiver’s retirement by providing credits used to calculate government pension benefits. in the U.S., this could involve tweaks to the social security calculations that mitigate the loss of contributions during years spent caregiving.
What Australia, Germany and the United Kingdom Are Doing…
The report notes that the three countries studied have robust programs to address all four of the types of policies listed. All three require certain-sized companies to offer qualifying employees flexible work policies. All offer some type of paid and unpaid leave. The three countries provide direct or indirect payments to support income for family caregivers. And, they all provide tax credits and pension support programs for family caregivers.
Download the report for more details. (See link below.)
The report is fairly easy to read. It’s focus is squarely on answering the question “what can government do to help caregivers?” However, the programs they have devised could easily be modified into employer-provided benefits.
Links
Download the Document: GAO Report: Other Countries’ Experiences with Caregiver Policies
More about the RAISE Act
More about the National Strategy for Caregiving
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