LEBC Talks About the Gender Pensions Gap

Men and women now have the same State retirement age but despite equal pay legislation, still lag behind men in the pension stakes. Here are some things women can do now to improve their security in retirement.

1. Non-Working Women
   
   Earmark part of the household budget for retirement savings: long career gaps, with little or no pension savings being made for decades, disadvantage women more than any other factor. However, the current rules allow all under age 75 to save up to £240 per month and to receive a 20% boost from the Government on their savings. Women who contribute to the family by caring for others and running the house should therefore demand that some regular private pensions are made from the family budget.
   
   If you are a mother of children under age 12 and are receiving child benefit you will automatically get credits for your State Pension. If you have waived payment of child benefit you need to claim this separately. To find out more see Parents Can Eliminate Child Benefit Tax. Other relatives caring for children can also claim state pension credits. For more information see Summer Holiday Childcare.
    
2. Women at Work
   
   Join your employers’ scheme at every opportunity and remain a member while on maternity leave: all employers are obliged to pay into pensions for workers aged 22 to 65 who earn more than £10,000 a year. The current minimum contribution is 2% from the employer, rising to 3% of eligible earnings from next April. Even if earnings are below this level, the employer may offer membership of the scheme and many employers pay in more than the minimum. This is tax-free money. Employer contributions may also continue during maternity leave, even after Statutory Maternity Pay ends.
    
3. Women Living With a Partner or Spouse
   
   Don’t make assumptions that your husband or partner’s scheme will automatically provide for you in retirement. While some schemes do, it all depends on the scheme rules and the kind of provision your husband / partner has indicated they want to be made for you. You have no automatic rights to a pension if you survive your partner or spouse, unless the scheme rules say you do. Cohabiting women are especially vulnerable and may get nothing; they are excluded from benefitting from the State Bereavement Pension and may only inherit after paying inheritance tax at 40%, if left more than £325,000, including the value of the home.
    
4. Women On Divorce
   
   Divorce amongst older couples is on the rise: for older couples, pension assets can be of greater value than the family home. 71% of divorcees fail to take pensions into account, when splitting assets, according to research from Scottish Widows. Since 2000 the spouse with the lower pension has a right to have some of the other spouse’s pension transferred into their name. Women are the ones who miss out by ignoring their rights to a pension share.
   
   
5. Women Near Retirement 
   
   It is a common mistake to dismiss pensions earned in the early part of a career; today there is estimated to be £20 billion of pension assets unclaimed according to research carried out on behalf of the ABI*. For those nearing retirement, tracking down all your pensions will be worthwhile. Even though you may have earned little 30 or so years ago, all final salary pensions since must be inflation-linked, so the value of your pension could mean the difference between affording luxuries when retired or not.
    
6. Shop Around
   
   At retirement women are also less likely to shop around when looking to convert their pension pot into an income. Only one in four of those who use LEBC’s lifetime income broking service are women – which means that many are potentially missing out on thousands of pounds of extra income.
    
7. All Women
   
   Women tend to take less investment risk than men when saving and investing. They need to consider that cash-based investments will not keep pace with inflation and when saving long term, this is important if the income the savings produce are to maintain their buying power. Balanced risk investments which provide returns from a variety of investments are more likely over the long term to enable savings to keep pace with inflation. 

Get in touch with LEBC today by contacting Andrew Marsden, Senior Employee Benefits Consultant via phone: 020 3437 1311 or email andrewmarsden@lebc-group.com

Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. A pension is a long-term investment. The fund value may fluctuate and can go down. All information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation, are subject to change. Taxation advice is not regulated by the FCA. LEBC Group Ltd is authorised and regulated by the Financial Conduct Authority. Registered address: LEBC Group Ltd, 1285 Century Way, Thorpe Park, Leeds, West Yorkshire LS15 8ZB. LEBC Group Ltd is entered on the Financial Services Register under reference 760755. Registered in England and Wales. Company number 03995199.

* The UK’s lost pension mountain could be worth £20 billion – at least six times higher than previously estimated https://www.abi.org.uk/news/news-articles/2018/10/the-uks-lost-pension-mountain-could-be-worth-20-billion/, viewed 14/11/2018