New research conducted by Legal and General found that women only have an average of £43,000 saved in private pensions whereas men have £82,000. 25% of women over the age of 50 have less than £5,000 saved in their pension.*
Why are women’s pensions so much less than men’s?
There are many factors that have contributed to the inequality in the size of women’s pensions.
The primary reasons are that women often have to take extended periods of leave from work to cover child care or caring for elderly relatives.
38% of women are employed part-time compared to just 13% of men**. Pay for full time roles is typically higher than the hourly rates that are paid for most part time roles. Another disadvantage of part time roles is that if the total income is less than £10,000 per year, then the employee will also not benefit from an auto-enrolment pension or receive any employer pension contributions.
How can women make sure they receive the full state pension?
Women who have a full National Insurance record could also receive £179.60 per week from the State Pension in the 2021/22 tax year.
Some women cannot benefit from the full State Pension due to taking time off work to care for children or relatives. Taking time off work means potentially losing out on National Insurance Contributions. This is unless they claim child benefits even if they are not entitled to it. Claiming for child benefits will mean that women will collect National Insurance credit even if they do not receive any child benefits.
Many women assume that as they are not entitled to the benefit then they should not apply. However, it is important to do so to receive the credit as if women do not have 35 years of National Insurance contributions, then they will not receive the full state pension. National Insurance credits can only be backdated by three months so it is important not to delay claiming.
How can women reduce the pension gap?
The sooner that women look to start planning ahead for their retirement, the more options that will be available and the more time you have to potentially benefit from investment growth.
Track down old pensions
If you have had multiple jobs in your career than it is likely that you have several small pension pots dotted around. At Four Wealth Management, a financial adviser can help you to track down these old pensions. They will then look into the underlying investments and let you know if they are suitable for your needs. This analysis will also help you to establish how much income you could potentially receive
Get your pension on track today
If you are concerned about the amount you have saved so far for retirement or don’t know where to start when it comes to retirement planning, you can book a no-obligation meeting with one of our financial advisers to discuss your options.
Book online now or call 0117 973 0500.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
*Legal & General, survey of 2,000 over-50s, 2021
**‘Women and the economy’, House of Commons Library, 2021