Women are often underprepared for retirement largely due to many women taking career breaks to have children or care for relatives and then stopping their pension contributions, or returning to work on a part time basis and not benefiting from auto-enrolment employer contributions. Women historically have longer lifespans than men so it is important that they prioritise planning their retirement to ensure that they have enough income to live comfortably.
The full state pension is currently £203.85 per week in the 2023/24 tax year. You will need 35 years of qualifying national insurance contributions in order to receive this full state pension amount. If you are unemployed, a parent or carer then you can claim national insurance credits to make sure you do not have gaps in your national insurance records.
You can check on the government website how many qualifying years you already have.
Save into a private pension to top up the state pension
As mentioned above, the full state pension amount is £203.85 per week which is unlikely to provide you with enough income to have a comfortable retirement.
If you are no longer contributing to a private pension then you should consider doing so if you can afford to. Subject to some limitations, pension contributions receive tax relief from the government. For example, to pay in £100 to your private pension, you only need to contribute £80 yourself and the government tops this up to £100 automatically which means a pension is one of the most tax-efficient ways to save for your future.
Review your old workplace pensions
You may have started various personal pensions through employers, it is worth reviewing these pensions and checking the performance and also calculating how much you have already saved in total for retirement.
If you need help tracking down your old pensions, you can book in a meeting with a financial adviser at Four Wealth Management online or call us on 0117 973 0500.
Claim child benefit
It is important to note that you need to claim child benefit, even if you have to pay it back, in order to maintain your national insurance records. Many people do not do this as they are not entitled to the benefits but then this means that they are missing out on years of national insurance credits which can directly impact the amount of state pension that they are entitled to.
Similarly, if you are a carer you need to claim carer’s allowance for an adult.
Pay voluntary national insurance contributions
If you notice gaps in your national insurance record, you do have the option to pay voluntary contributions in order to make sure you have the full 35 qualifying years to receive the full state pension. A financial adviser at Four Wealth Management can help you to calculate how much additional income this would give you and how much it will cost you so that you can work out if it is worth doing.
Book a no-obligation meeting now
Save into a pension – even if you are not working
You can still save up to £2,880 into a pension each tax year if you are not working, and the government will boost this by £720 through tax relief, which means £3,600 in total goes into your pot. These are the figures for the current 2023/24 tax year.
You can pay this from your savings or someone else such as your partner can contribute into your pension on your behalf although you must set up the pension yourself.
To start a pension, you can book a no-obligation meeting online now.
Delay taking your state pension
For every nine weeks that you delay taking your state pension then the amount you will receive each month increases by 1% which is around 5.8% per year. If you are healthy and want to continue working past the state pension age then this is something you could consider.
However, it is worth noting that by deferring for a whole year it would take 17 years to earn back the pension that you had missed in that one year.
Review your retirement options
Pension rules, tax relief and allowances are complex. To fully understand which options apply to your individual circumstances, you can book a no-obligation pension review meeting with a financial adviser at Four Wealth Management. The first meeting is usually around an hour and can be on zoom, at your home address or one of our offices.
Book online now or call us on 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 levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
