Bridging the gap: pushing for pension parity 2
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As discussed last week, the gender pension gap exists for many different reasons. Women are typically more likely to:
- still be paid less, due to the gender pay gap
- take career breaks to have children
- work part-time (72% of part-time workers are women) because of childcare or care responsibilities, according to research by Scottish Widows
- hold fewer senior leadership and management roles.
All these combined mean women are seeing lower pay and lower pension contributions.
Six actions that could help improve your standard of living in retirement
1. In a long-term relationship? Have a stake in your finances
Talk through financial matters together. This includes things like day-to-day money, savings, insurances, and pensions, plus thinking about how your household expenditure is shared and who pays for what. It’s never too late to have these conversations to ensure you’re both on the same page.
One important thing to remember is to update any financial and pension beneficiaries if your circumstances changes.
💡 Find out more about completing expression of wish forms and making a will
2. Divorce adds to the gap
Research conducted by Insuring Women’s Futures revealed 71% of divorced people didn’t discuss their pension during divorce proceedings. This is huge, given the average pension wealth for married men is £53,000 and £10,000 for married women.
Should divorce ever come into the picture, consider carefully how your assets are split and keep pensions at the front of your mind. There’s lots of different options and how you approach this can make a big difference to you later in life.
💡 MoneyHelper has lots of useful information about divorce and pensions
3. Decisions about annuities are incredibly important
Heterosexual couples’ large differences in pension wealth mean the decisions you make around annuities are especially important. For example, choosing a single life annuity can leave a woman who loses her male partner with very little income. A joint life annuity provides an income for your spouse, civil partner, or other dependant after you die.
You can further tailor an annuity to your personal circumstances. For example, you can add value protection, where you protect part or all of your pension savings as an amount to be paid to your beneficiaries – then, after you die, your annuity provider takes off the income you’ve received, and if there’s any money left, pays it to your beneficiaries.
4. Track down any lost pensions
There’s an estimated 2.8 million lost or forgotten pensions pots out there. As many as 1 in 20 people could be missing out on pensions worth, on average, £9,500 each.
How do you lose a pension? Maybe you moved home and didn’t tell your pension provider your new address. Paperwork can easily get lost. And possibly you didn’t even realise you were in a pension.
But it’s your money and finding it could transform your retirement.
💡 Find out more about tracing lost pensions
5. Don’t forget about later life care – for yourself and others
More people in their 50s are caring for children, whilst also becoming carers for older relatives. Research shows 58% of unpaid carers are women and people aged 46-65 were the largest group to become unpaid carers. And with the cost of living crisis, carers are facing additional pressure on their finances with 63% extremely worried about managing monthly costs.
If you become a carer for older relatives, there may be financial support available (like the Carer’s Allowance and Carer’s Credit). It’s also worth checking whether your workplace offers enhanced carer benefits.
💡 Find out what support is available at Carers UK
Further to this, women typically live longer than men (life expectancy at age 65 was 18.5 years for males and 21 years for females), but can expect to live in ill-health for 19 years compared to 16 years for men. This means women can expect to pay more towards care costs in later life – the average cost of residential care for women aged 65-74 entering a care home is £132,000 compared to £82,000 for men. This means retirement planning is key.
6. Don’t forget child benefit
The number of older families (35-55 years) with young children is expected to rise by 14% as people have children later. In 2019, the number of women aged 45 and over giving birth was at the highest level since records began.
If you’re considering a career break or changing to part-time work, it’s worth thinking about how it could affect your long-term earnings and your pension. As we mentioned last week, every little counts and small contributions to your pension can add up over time.
It’s also worth considering Child Benefit. Child Benefit is a regular payment from the government to help with the costs of raising a child. Payments are tax-free, so long as neither parent earns more than £50,000 a year. If you claim Child Benefit, you’ll also be credited with National Insurance contributions until your youngest child is 12, even if you’re not earning. So it’s worth thinking about to protect your State Pension.
💡 Find out more about Child Benefit on the MoneyHelper website
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