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| Image by Alexander Kliem from Pixabay |
{This post was commissioned by Profile Pensions and Mumsnet}
Did you know that the average person who takes pensions advice will increase their pension wealth by £31k? (1) That is a pretty massive amount, right? If you live frugally that is enough to keep you going at least another couple of years, or maybe you want to splash a good amount of it on a once-in-a-lifetime world cruise or the car of your dreams. Whatever it is that you choose to do with your money, there is no denying that £31K can make a big difference to the average person's life.
The Gender Pension Gap
I think pensions are a funny old thing and certainly not always top of your
priorities. As a teenager, I didn't even think about them and then even in
my early twenties when I got my first proper job I wasn't worried about
paying into a pension. It was only when I started to earn a good amount of
money in my mid to late twenties with a company that was going to pay a
decent amount into my pension that I realised it was a really sensible idea
to start saving for later in life. Before that point, I hadn't realised that
the money I paid into my pension was taken before my tax and NI was applied
to my wages and therefore it was really working well for me, saving me
paying tax.
It's certainly now one of those times where you see the benefit of hindsight
as I earned a lot of money in my late twenties and I now really wish I'd
been paying in additional contributions to my pension, especially as the
company I was working for even matched contributions and what I'd paid in
would have been doubled. Never, in my twenties, did I guess that in my
forties I'd be self-employed and not even have a current pension scheme!
It appears this is the story of many women; they don't see any urgency to
pay into their pension as a younger woman and then have time off to look
after their family and end up regretting their lack of financial planning
later in life when their pension pot is considerably less than a man's.
Research conducted by the Chartered Institute of Insurance
(2) found that by the time a woman
is 65 to 69 her pension pot will be only about a fifth of the pot of a man in the same age bracket, the woman's being roughly £35,700.
This gender pension gap is a reality and it appears that it not only comes
about because of women perhaps working less due to family caring
responsibilities but also as "the result of the unequal accrual of pension
entitlements over decades. It is mainly the product of women’s lower state
pension entitlement, the gender pay gap and lower historic access to
workplace pensions" (3)
