Women are saving more than ever into pensions, but they still lag behind men in retirement savings.
The good news is that the proportion of women who are now saving for their retirement has increased, along with their level of contributions, according to a recent report from pension provider Scottish Widows, which has tracked women’s pensions for the last 15 years.
Most of us are familiar with the gender pay gap. The idea of a “gender pension gap”, which sees women retire on far smaller pensions, is less well known. Although it is narrowing, equality is a long way off. Scottish Widows found that while 57% of women were now saving enough for their retirement, self-employed women and those in lower earnings brackets remain under-prepared for their retirement. Men are still saving more and benefiting generally from an additional £78,000 in their pension pot at retirement.
The main cause of the pension gap, unsurprisingly, is the pay gap. Women, on average, still earn less than men. Most people pay a fixed percentage of their earnings into a workplace pension, so this means less money is being invested for women’s retirement.
The fact that women are more likely to work part-time, or to take time out to look after young children or elderly parents, exacerbates the problem. Other life events, like divorce, can also impact negatively on women’s savings.
At the same time, women typically live longer than men, so if they are to enjoy the same standard of living in retirement, they ideally need larger pension pots – not smaller ones.
Some strategies can help bolster women’s savings options:
Maximise your savings: Join a workplace pension – your contributions are boosted by tax relief and contributions from your employer, which may increase if you pay in more. If you are self-employed, you don’t benefit from an employer’s contribution, but you can still benefit from tax relief on the money saved into a personal pension arrangement.
Get a pension forecast: Find out what you are likely to get from your State or workplace pension and when you can take them. If this isn’t enough to live on, you should aim to save more each month. The earlier you start, the better. The easiest way to obtain a State pension forecast is to apply online via the link. If you are unable to access online, you can complete a BR19 form to send in the post or request a statement by contacting the Future Pension Centre helpline 0800 731 0175.
Don’t overlook your partner’s pension: Some pensions will pay out to a surviving spouse or partner. If you are not married (or not in a civil partnership) you may need to sign a form to qualify. If your partner has more substantial pensions savings, make sure you aren’t losing out on this potentially valuable benefit. Aim to build pension savings in your own name, though, because if you rely on your partner, then you could lose out if the relationship breaks down.
Our experienced Financial Planners can help you review your options so do give us a call if you are unsure what route to take!
The value of your investments and the income from them can go down as well as up and you may not get back the full amount you invested.
Past performance is not a reliable indicator of future performance.
Occupational pension schemes are regulated by The Pensions Regulator.
The Financial Conduct Authority does not regulate tax advice. Tax laws can change
