Women are woefully underprepared for retirement compared with men, fresh data has confirmed.
But if you’re anyone stuck in that predicament, how do you put it right?
Financial giant Aegon has created a 10 step to-do list, after its latest research found one in three women are unsure of how much they have saved for a pension, compared to one in five men.
‘Many women are burying their heads in the sand,’ said head of pensions Kate Smith.
‘Everyone should think ahead to retirement, regardless of their age or gender.’
Pension readiness: Women are woefully underprepared for retirement compared with men, fresh research has confirmed
The basic route to getting on top of your pension is to estimate roughly how much income you will need in old age, research how much you already have saved up in various places, and then try to make up any gaps, according to her blueprint.
See below for Smith’s full guide, to be followed by women and men alike.
How bad is the pension gender gap?
Aegon’s study found 15 per cent of women have no pension arrangements, compared to 11 per cent of men.
Women are half as likely as men to be confident about their ability to retire comfortably.
Just six per cent of women say they have ample funds set aside, compared to 13 per cent of men.
Younger women are more likely to have a pension – probably as a result of auto-enrolment into workplace schemes in recent years – and a lack of any retirement savings is more far more prevalant in the older generations.
Kate Smith: ‘The extent of the gender pension gap is shocking’
Aegon found just seven per cent of women aged 18-34 don’t have any pension arrangements, rising to 15 per cent for those aged 35-54, 25 per cent for those aged 55-64 and 44 per cent for those 65 plus.
This suggests women still in their 20s and 30s now are much more likely to be financially prepared by the time they reach retirement, although there are still pinch points to beware of, such as pausing work to have kids or caring for elderly relatives.
Aegon’s findings mirror those of previous studies, including one by AJ Bell last year which discovered women are reaching retirement with pension savings worth £59,000 on average – just two fifths of the £143,000 held by men.
‘The extent of the gender pension gap is shocking with many women on the back foot,’ says Smith.
‘The reasons for the gap between men and women when it comes to saving for retirement mirror those of the pay gap.
‘Lower pay filters down to lower retirement income.’
Smith adds: ‘Women’s ability to save for retirement is often interrupted by breaks in their career.
‘This can be in order to raise a family or to care for elderly parents and often is unavoidable, but it ultimately means that many women end up playing catch up with their pension saving.’
How do you sort out your pension?
Anyone concerned about the amount that they have in their pension pot should take action now, according to Smith.
She created the following 10 step to-do list to help people get started.
1) Work out how much you need in retirement
How much do you need to cover essential expenses in retirement?
Read our guide to working this out, including a checklist of regular expenditure to fill in according to your own personal lifestyle.
Everyone has different aspirations and ambitions for their retirement years, so you need to work out how much you need to achieve the lifestyle you are striving for in the years post work.
It’s well worth calculating how much money you will need each year for necessities and any extra money you might need for luxuries such as for holidays or even gifting to children.
You should be realistic about your circumstances, thinking about when you want to retire, how many years you have left to work and consider whether or not retiring fully is feasible or what you want to do.
Many individuals are opting to work part-time or take a more flexible approach to employment when they are at or near retirement age.
2) Check your state pension entitlement
Find out if there are any gaps in eligibility and work out what you need to do to top up by paying National Insurance contributions that will entitle you to receive a higher state pension.
In order to get the basic state pension when you reach state pension age you must have paid or been credited with National Insurance contributions.
To get the full basic state pension you need a total of 35 qualifying years of National Insurance contributions or credits.
How much is the state pension?
The basic state pension is currently £125.95 a week. It is topped up by additional state pension entitlements – S2P and Serps – accrued during working years.
The two-tier state system has changed for people retiring since 6 April 2016, when it was replaced by a new ‘flat rate’ state pension. This is currently worth £164.35 a week.
People who have contracted out of S2P and Serps over the years and retire after April 2016 get less than the full new state pension.
3) Track down all your old pensions with previous employers
Try to find out if you have any old pension schemes with previous employers. You can do this by getting in touch with old employers directly to trace pension pots that you have forgotten about or maybe not even realised you had.
The first step is to go through all those dusty piles of paperwork you’ve moved from house to house (we all do it) to see if you can find details of any old pension schemes.
Then, simply write to the company providing the pension, tell them your new address, and ask for information about your pension
If you’re trying to track down a workplace pension, you could try contacting the company you used to work for.
They may be able to point you in the right direction.
If you’re still drawing a blank – say your old employer doesn’t exist anymore, or you’re trying to track down an old personal pension and you don’t have any information – don’t give up.
The Government offers a free pension tracing service to help you track down any missing pension pots.
Visit the website here or you can also request contact details from the Pension Tracing Service by phone on 0800 731 0193 or by post.
4) Consider merging your old pots
Once you have located old pension pots, an option is to consolidate them which involves bringing all the separate pots of pension savings into one place.
This not only makes it easier to keep track of your savings but could save you money. It’s best to take financial advice before you do this.
5) Check your current workplace pension
The next step is to find out how much you have saved in your current workplace pension and how much you’re paying in.
Each month a percentage of your pay is put into the pension scheme and thanks to auto-enrolment, your employer has to contribute too if you earn at least £10,000 a year in a single job.
6) Compare what you’ve saved against what you’ll need
You can compare what you’ve saved to what you’ll need in retirement and there a number of online services that will help you to do this, including Aegon’s retiready planner.
7) Put a plan in place to increase contributions
If the steps above have left you worried that you don’t have enough, or quite as much as you hoped for retirement, don’t panic.
Where you can, try to match your employer’s contribution into your workplace pension.
Put a plan of action in place to increase your contributions if you are concerned you don’t have enough. This could be something simple like adding any bonus or pay rise into your pension pot.
Is your work pension up to scratch?
Six ways to tell if your retirement savings are in a duff investment fund. Read our guide here.
Many people fail to engage with their workplace pension.
Some people think that getting their head around saving and investing is complicated but whether you like it or not, your money is being invested and you have a right to say where it is invested and the amount of risk your money is exposed to.
Find out if the fund your pension is invested in is performing at its best and doing what it needs to be doing.
If you are a 40 per cent or 45 per cent taxpayer don’t forget to reclaim tax.
8) Review your other assets
When looking ahead to retirement, it is wise to consider what other assets you might have that could support you in retirement.
Do you own property? Do you have savings, an Isa or individual pension? These assets coupled with pension pots could help you to be in a better position for retirement.
9) If in doubt, seek expert help
Should everyone save 15% of salary towards a pension?
That includes your own contributions, free top-ups from employers which are mandatory under auto enrolment, and tax relief from the Government. Read more here.
There are a number of organisations who can support with the above. To get guidance or advice the following sites are useful:
Pension Wise (free help for over-50s)
0800 138 3944
The Pensions Advisory Service (free help for everyone)
0800 011 3797
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10) Calculate your overall retirement savings, and act if it’s not enough
With all the information gathered in the steps above, you should be able to calculate an overall figure.
It’s important not to worry if the figure isn’t as high as you thought it might be or isn’t enough to meet your aspirations.
There’s still time to take action and it’s never too late to start saving more.
As a rule of thumb, over a lifetime it’s good to save 15 per cent of your salary into your pension.
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