Local independent financial adviser, Becky Hammonds of Willow Financial Solutions, looks at why women’s pensions are falling behind their male counterparts and what they can do to improve matters.
Women’s pension savings have fallen behind men’s pension pots in terms of size, so how can they prepare for a financially comfortable retirement?
According to the Office for National Statistics (ONS), the average pension pot for a woman in England and Wales aged 55 to 64 is £141,600. This sounds like a healthy sum until two other statistics are taken into account: the fact that the average male pension pot for someone the same age is £237,100 and the fact that women are still expected to live longer than men.
Previous research from Fidelity International found women’s pension savings were on average, almost 11 per cent lower than men.
There are several reasons why women’s retirement incomes are less than men’s. These include time spent out of the workforce caring for children and other family members, as well as an increased likelihood to work part-time.
Royal London carried out analysis that showed confusion around child benefit changes which led to approximately 63,000 mothers losing out on National Insurance credits, which could be used to boost their State Pension entitlement.
As a result, since the change was made, the total amount of future pension rights lost could exceed £1bn. So, letting women know they should remain opted into the child benefit system, even if they are a higher earning household, is extremely important in helping them build up a decent state pension entitlement.
It is also worth encouraging them to save as much as possible, rather than just the minimum, into any workplace pension. The employer top-up available on many defined contribution pensions is worth making the most of, as are the current tax breaks offered by the government on contributions made into workplace savings.
Also, remember there are ISAs and other savings available, other than a workplace pension, which can help women to build up an overall portfolio of investments to help them fill that pension gap.
If you would like an independent appraisal or need help starting a pension, contact Becky Hammonds on 07969 269677 or email email@example.com.