Eight tips to help women boost their pension savings
Men have almost three times as much saved in their pension as women, with an average pension pot of £73,600 compared to women’s of just £24,900, according to new research from Aegon UK.
But the research highlights that the value of women’s pension pots has been increasing over recent years. In April 2015 women had just £16,700 saved on average.
A number of reasons are credited for this increase, including auto-enrolment, pension freedoms and the fear that pension tax relief could be reduced, encouraging women to take action to contribute to their pension funds.
On the level of engagement there is also a gap, as 42 per cent of women have never reviewed their pension plans; just a fifth have checked or amended their pension plans in the last six months, compared to a quarter of men.
Kate Smith, head of pensions at Aegon, says: ‘Women often face a more disrupted savings journey due to maternity leave and working part time, juggling a career and children, so it’s crucial that they actively engage with their pension savings – burying heads in the sand is simply not an option.’
She continues: ‘Gaps in pension savings history can leave you worse off in retirement, but for most women it’s unavoidable. As long as women are having babies, they will always be on the back foot when it comes to pension savings.
‘For example, taking a full year off work on maternity leave and stopping or reducing pension contributions to a workplace pension could lead to women needing to work longer to make up the shortfall. However, with the right preparation, arrangements can be made to fill the gap before it’s too late.’
Smith suggests that the financial services industry and employers both have an important role to play in getting women more engaged with their pensions. Such initiatives could include provision of online tools, support for those who want to review their pension savings during working hours, and making it easier for them to meet with professional advisers.
There also remains a gender pay gap of about 10 per cent in the UK, based on median earnings for full-time employees, according to the Office for National Statistics.
As a consequence of that shortfall in earnings, women are able to save less in all aspects of their financial planning, including their pensions and investments. http://www.moneyobserver.com/our-analysis/how-can-we-get-more-women-investing
Smith eight tips for those who wish to engage with their pension savings are:
· Don’t delay. Start saving as early as possible. Make a plan, including all your pensions and savings
· Don’t opt out of your workplace pension. Save enough to maximise your employer’s pension contribution
· Work out how much you’ve saved, both in pensions and in other savings you’ve targeted for retirement, such as Isas.
· Get a state pension forecast online or call the Future Pensions Centre helpline on 0345 3000 168
· Work out what retirement income you need. Use online tools and calculators such as Retire Ready
· If you are in your scheme’s default fund, do your research and consider selecting your own funds
· Regularly review your plan, your pension and savings accounts. This is especially important for women returning to work from maternity leave and those whose children have reached school age, when nursery and childcare costs are no longer an unavoidable expense
· Get professional financial advice.