How to close your own gender pension gap

Picture of daffodils against blue sky

Stand tall on International Women’s Day

For International Women’s Day, trying to #BreakTheBias, here are my quick tips on how to close your own gender pension gap.

Shockingly, women on across the UK have almost 40% less in their pension pots than men, according to research by PensionBee. This gap in retirement saving doesn’t start out so big – 13% for under 30s – but becomes a gaping chasm by the time we get closer to retirement, widening to 46% for people over 50. Yet as women typically live longer than men, they actually need more money to cover their retirement.

More money, more pension

The harsh reality is that if you want more out of your pension, you need to pay more in. Women tend to earn less over their working lives, whether due to the gender pay gap, taking time out to raise children, or by working part time, so they have less to pay into pensions.

At least if you’re aware of the need to set extra aside for retirement, you can try to do something about it. 

Grab any work pension with both hands

Thanks to auto-enrolment, most employees get signed up for a pension whether they like it or not.

Don’t opt out!

Turning down a work pension is like turning down a pay rise, because you’ll get free money added to your own pension contributions by your boss and by the tax man. 

More on What is a pension and why you should care

Pay extra into your pension while you can

Even if retirement seems a bazillion years away, it’s still worth starting a pension, because those early contributions really roll up over the years thanks to the miracle of compound growth

In fact, see if you can afford add more, especially if your employer is willing to match contributions beyond the legal minimum. It’s worth stashing extra into your pension during your early years if there’s the remotest possibility you might take time out for children, or work part time, later in life.

Budget for pensions during maternity leave

Klaxon alert: discuss pensions with your other half before having kids. If one person stops work to stay home, often their pension contributions stop too. Yet the parent who keeps on working keeps raking in retirement savings. 

As I said in this post, if you make a joint decision to have children, and a joint decision about who takes time out to look after them, then make a joint decision about how to fund pensions for you both. Tot up whether the family budget can stretch towards your retirement too. Even if you’re not earning anything at all, you are still allowed to pay up to £2,880 a year into a pension, and get 25p added in free money for every £1 you put in.

Hang onto your State Pension

The State Pension is hardly going to keep you in caviar and private jets, but don’t knock £9,371 a year, the current forecast for the full new State Pension. More than a quarter (27%) of women are rely solely on the State Pension to fund their retirement – almost twice as many as the number of men (15%).

To qualify for the full whack, you need to rack up 35 years in National Insurance contributions (NICs) 

If you do take time out to have kids, and so aren’t earning and aren’t paying NICs, make sure to register for Child Benefit. Register even if  your partner earns over £50,000 a year and the Child Benefit starts getting clawed back in tax.

Crucially, if you’re the person named for Child Benefit, you will get credits towards your National Insurance record until your youngest kid hits 12, which will help protect your entitlement to the State Pension.

Boost contributions in later life

As we get older, we’re likely to hit peak earning years. Some of our major costs may disappear, if student loans, childcare, uni costs and mortgage payments are no longer an issue. We may even have lump sums available from downsizing or inheritance.

If you want to close your gender pension gap, shovel spare cash into your retirement savings. That way, you benefit from the free money in tax relief, while knowing it’s not long before you can whip money out again.

For most people, the maximum you can pay into a pension is 100% of earnings, capped at a maximum of £40,000 a year. 

But if you’re lucky enough to earn over £40,000, you may actually be able to pay in more.  You can mop up unused pension allowance from the last three tax years and turbo charge your contributions, although you still can’t pay in more than you actually earn.

Make your money work harder

As well as trying to top up your pension, narrow the gender pension gap by making your money work harder. Check where your money is invested. Don’t leave it sitting in a staid default fund if you have years to go before retirement – you can afford to take more in risk in the hope of higher returns, knowing you have time to ride out stockmarket falls. Check your pension charges too. The more you pay, the more your pension has to grow just to stand still. Switching to a pension plan with cheaper charges helps you hang onto more of your own money.

 

Now – over to you. What have you done to help chose your gender pension gap? What are you doing now to make sure you can retire in future? Do share in the comments, I’d love to hear!

Leave a Reply

Your email address will not be published.

5 Comments

  1. 17th March 2022 / 4:00 pm

    That’s right! We need to think carefully when planning our future and pensions are no exception! Great article! Congrats for the post!

    • Dennis Beans
      24th July 2022 / 9:12 am

      I was scammed by cityinvestgp, I got a message from a trader on my Instagram and told me about how high their profit after investing was, I decided to invest in the online trade but they kept asking for more money including withdrawal fee and it was until then I realized I was being scammed. I couldn’t let go because I invested my savings as at that time. I had to make a research on how I could recover my funds from them and I came across the website REMOTESPYTECH (@) GMAIL COM after so many searches. I read several good reviews about the website from various scam victims they have helped and I decided to contact the website admin for help.
      I was opportune to get my money back from the scam brokers through the help of the website recovery professional, they recovered my investments for me with all the profits I was entitled to within two weeks of contacting them. You can write REMOTESPYTECH (@) gmailcom for help too if you a victim of any kind of scam

      They are experts at dealing with online scam and assisting victims in receiving reimbursement, tracking down digital fingerprints, cyber analysis and thorough investigation.

      They offer other services such as

      Phone cloning ( catching, monitoring and tracking a suspected cheating spouse )

      Website hack

      Boost of credit scores

      Clearing of criminal records

      Fixes bad debts etc

      Contact them now!!!

      REMOTESPYTECH (@) GMAIL, COM

      WhatsApp: +56 9 3129 3092

      Awesome Service…

  2. Dennis Beans
    24th July 2022 / 9:12 am

    I was scammed by cityinvestgp, I got a message from a trader on my Instagram and told me about how high their profit after investing was, I decided to invest in the online trade but they kept asking for more money including withdrawal fee and it was until then I realized I was being scammed. I couldn’t let go because I invested my savings as at that time. I had to make a research on how I could recover my funds from them and I came across the website REMOTESPYTECH (@) GMAIL COM after so many searches. I read several good reviews about the website from various scam victims they have helped and I decided to contact the website admin for help.
    I was opportune to get my money back from the scam brokers through the help of the website recovery professional, they recovered my investments for me with all the profits I was entitled to within two weeks of contacting them. You can write REMOTESPYTECH (@) gmailcom for help too if you a victim of any kind of scam

    They are experts at dealing with online scam and assisting victims in receiving reimbursement, tracking down digital fingerprints, cyber analysis and thorough investigation.

    They offer other services such as

    Phone cloning ( catching, monitoring and tracking a suspected cheating spouse )

    Website hack

    Boost of credit scores

    Clearing of criminal records

    Fixes bad debts etc

    Contact them now!!!

    REMOTESPYTECH (@) GMAIL, COM

    WhatsApp: +56 9 3129 3092

    Standard Service

  3. loan financial
    25th July 2022 / 3:02 pm

    Good day. Quick loans Service available here. I am a private loan lender that gives out both business and personal loans to individual at a low interest rate of 2% no matter your location. If you are interested Contact me (Whats App) number:+917310847059 sumitihomelend@gmail.com Mr. Sumiti

The contents of this blog are for information and ideas, and should not be viewed as financial advice. Use of the material is conditional on there being no liability for how you choose to use it. If you are unsure about any investments or financial issues, please contact a financial adviser.