The Department for Work and Pensions (DWP) has recently released a statement to urge people… Read more »
Many women missing out on the workplace pension
A recent study from Citizens Advice has found that tens of thousands of women are missing out on the workplace pension due to having more than one job. While a separate study by insurance company, Zurich, shows that women still receive much smaller pensions, on average £47,000 less, than men by the time they reach retirement.
Women are missing out on the workplace pension as they are not reaching the earning threshold to qualify for the auto-enrolment pensions. Currently, the threshold is set at £10,000 a year but over 100,000 people, many of those women, earn less than this because they work for a number of companies.
The charity estimates that 72,000 women are missing out on workplace pensions and commented that too many people were being shut out of the opportunity to save for a pension which will pay them during their retirement years.
Gillian Guy, chief executive of Citizens Advice, had this to say to the BBC; “Many people – particularly women – work several part time jobs, which helps them manage commitments like childcare or study… But while in many cases they earn over £10,000, and pay tax on this combined income, they don’t have access to a workplace pension and miss out on the opportunity to save for their retirement.”
The study by Zurich found that between 2013 and 2016 women received around 7% of their salary in pension contributions whereas men received around 7.8%. They feel that this is mainly as a result of men tending to work in more established sectors which offer more generous pension schemes while women are much more likely to take a career break due to having children or returning to study.
The £47,000 shortfall between the pensions of men and women is something Zurich and Citizens Advice, among others, feel cannot be ignored. They label it as the triple effect of smaller salaries, career breaks and lower contribution rates that are having the biggest impact on the pensions of women.
The government has said that it is planning to review this issue later this year as it examines the auto-enrolment programme and the issue of workers with multiple jobs. A spokesperson from the Department of Work and Pensions said; “There’s more to do – especially for people with more than one job – and we’re currently reviewing the policy to see how it can be improved,”
If you are a woman worried about missing out on the workplace pension scheme or you are just looking at trying to save more for your retirement, there are a few options available to you.
- Tackle debt – If you have any outstanding debt, it would be beneficial for you to pay it off before your retirement. Otherwise your pension will go towards paying off your debts instead of being a salary for you to live on and enjoy yourself with in your retirement years.
- Pay in a bigger percentage of your salary – For those already paying into a pension scheme with the minimum monthly payment, it may be worth raising your monthly contribution in an attempt to significantly raise the amount in your pension pot. Look again at your budget and your salary and if you can, even a 1% rise could make a big difference to the money in your pension.
- Defer your pension – If you are reaching retirement age but you don’t think you want to retire just yet, you will be able to delay taking your workplace/private pension. If you can still live on the salary you have this will give you the opportunity to carry on saving for your pension to have a comfortable, well-earned retirement at a later date.
- ISA – An ISA is a tax-free savings account providing you with the opportunity to put a decent chunk of money away every year. If you do not qualify for the workplace pension or you want to save extra, an ISA could be a good way of doing that. The new Lifetime ISAs give you the opportunity to save specifically for your retirement and with the limit rising to £20,000 a year, you can put a good amount of money away every year for the future.
- Property – A common option for saving and investing in your future, property is still a popular method for some. However, the property market has always been uncertain and at the moment, it is particularly turbulent especially in certain areas of the country. With tighter restrictions and higher stamp duty on buy to let properties, it may become a more difficult and uncertain investment.
If you are worried about your pension or you need pension advice, we recommend you get in contact with a specialist pension adviser to discuss your queries and concerns.