Woman's legs in the air. Pensions for women, workplace pensions

7 Steps to Improve Your Pension Position

Is it possible to make Pensions ‘sexy’?

This may sound like a strange approach for a financial advisor, but trust me if there was a Viagra equivalent to get young women interested in pensions it would be a godsend…

…maybe we should just not call pensions ‘pensions’ – for who wants to think about getting old? – but there is something about them that appears to be a real turn-off, right at the age when we should be embracing them.

Pensions have Amazing Tax Incentives

It doesn’t seem to be enough of a pull that the government are effectively throwing money at you every time you make a contribution, and it’s not a small amount either a whopping 20% incentive. But also if you invest correctly, you can get quite spectacular growth on your pension contributions from the fund just sitting there growing and compounding for many years  – a true story to illustrate:

Don’t Delay and Don’t Forget about any Past Employee Pension Contribution

A friend of mine worked in a very junior position in a bank 30 years ago. She was there for only five or so years until she left to have children in her early twenties. Now she’s 55, and a friend, an old colleague from the bank,  said to her –

‘You should check your workplace pension’, ‘ What pension? I didn’t know I had one’  – she replied- ‘You will have done, everyone did’.

So, after a few weeks she finally got round to chasing up the employer’s pension scheme administrator, thinking it would be nice if there was a windfall of £10k or £20K waiting for her. She was totally shocked at what she found. 

She had a pot of over £100k that she had no knowledge of as she hadn’t informed her old employer of her changes of name and address.  Admittedly in those days, the banks provided very generous non-contributory pension schemes for their employees, but you get my point – ignore pensions at your peril.

Interest in Pensions Rises as Retirement Looms

It is true that pensions start to get really interesting when you are about to retire.  If you know anyone in this position you will be aware that it can border on obsession – the lure of the 25% cash free lump sum, and money for doing nothing after a lifetime of work; the attraction of slowing down and spending more time on hobbies or family inevitably comes with the questions…

‘How much?’ and ‘ Will I have enough for the lifestyle I want?’, but sadly it’s then possibly too late to significantly boost your retirement income, action to ensure all is well needs be taken way ahead of retirement.

It is never too late though to ensure that the money is in the best place and working in the best way for you, so reviewing your pension even at a late stage is crucial.

Longevity and Pension Poverty

We are generally living longer, and so require more money to see us through retirement, and sadly currently 20% of pensioners live in poverty – that’s 2 million people in the UK.

One in 10 of us don’t invest in pensions because we don’t understand them or know how much to invest, and then those that do are generally only contributing a third (5%) of what is really necessary (15%) to ensure a comfortable twilight years Help to improve women’s financial resilience to secure a better future for all – CII – Insuring Women’s Futures (insuringwomensfutures.co.uk)

And it’s Worse for Women

If you boil it down to the statistics for women only, the situation deteriorates further. Maybe it’s no surprise given working patterns that the average pension pot for women is only £35,800 – a fifth of the average man’s.  Drill down further and it’s even worse if you are divorced with the average pension pot a paltry £9k.

Paper cut out women with banner - a plea to divorcees - know your pension rights

A Plea to Divorcees – Know Your Pension Rights


Pension Statistics for Women

All of the statistics are shocking: over a lifetime, a woman is likely to earn 80% less than a man, 75% of people earning less than the £10k auto-enrolment threshold are women, part-time women earn 30% less than full time. A five year career break could end up costing you a 33% reduction in pension……and depressingly, so it goes on and on. It is hard to find anything positive to say about the situation for women when it comes to pensions. But that doesn’t mean this can’t be changed

Yes pensions are complex, yes there are rules, thresholds, limits and tax implications, but that is what we at Women’s Wealth are here for.  Your financial advisor is the expert who can guide you through the myriad of technicalities; you do not need to understand pensions, as we do that for you.

But, there are some basic steps that you can take to ensure that you are not compromising your future:

7 Steps to take NOW to ‘Improve Your Pension Position’

  1. Make sure that you check your NI record – you need to have 35 qualifying years to achieve the maximum state pension (currently £203.85 per week) at 66 (but this age is gradually rising), you can also make up missed years.  Check your State Pension. Check your National Insurance Record.
  1. Review your pension status – do you have a workplace pension? What sort is it? 
  1. Do not ignore your annual pension statement – try to understand what you are contributing and how much it is worth
  1. Do not opt out of any auto enrolment pension, even if encouraged to do so (10% of people do)
  1. Make sure that you advise your pension companies of changes of address
  1. If you need help finding old pensions use the pension tracing service by following this link. Find Pension contact details
  1. Above all, get some expert pension advice to assess what you already have in place, and how to construct a tax efficient pension plan for the future, to secure your future lifestyle and to address any financial aspirations.

Learn to Love your Pension

Pensions really are the best way to achieve tax efficient savings.  There are a number of things in life that get better with each passing year: whiskey, blue jeans, leather boots, cheese, wine, antiques, trees and friendship.

Let’s put pensions on the list right at the top, but like many of the other items, the earlier you start the better, but neither is it ever too late.  Consider your pension the key to your future satisfaction…. you might then love it more.

Book a free 15-minute discovery call with Women’s Wealth and let our team of fabulous female advisers help you improve your financial skills and level up your money savvy.

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