It is females who lag the most when it comes to any sort of private pension saving, according to research by Fidelity International among people who have accessed their pots since April 2015.
We found a significant group - mostly women - whose savings are barely covering their essential expenses are struggling to know what to do.
Of the pension products women hold, they are far behind men in terms of employer pension coverage (except for defined benefit pension schemes) and for self-invested personal pensions (Sipps). They are also more than twice as likely not to be able to even say what type of pension they have. See the table below.
Which if any of the following pension schemes do you hold?
| Men | Women | |
|---|---|---|
| I have a self-invested personal pension (Sipp) | 47% | 21% |
| I have a guaranteed defined benefit (final salary) scheme | 52% | 54% |
| I have a defined contribution pension scheme | 40% | 27% |
| I have a pension but I don't know which type | 7% | 16% |
Source: Fidelity International 2017.
Among the women who do have some sort of pension product, for a significant group it’s not enough to cover even their basic expenses - 39% of women vs 23% of men.
In addition, figures from independent research organisation the Pensions Policy Institute show that, on average, women will get £30 less per week in retirement income than men, even if they have worked full-time with no career break.
So, what can women (and men) do to plug the gap? Watch the video below for tips from Moneywise editor Moira O'Neill and Fidelity International associate director Maike Currie.
For those approaching/at retirement:
- Plan as best you can - Our research shows that 11% of men and 18% of women have not done any form of retirement planning. Even more worryingly, 17% of people aged 65+ have no plan and crunch time will be soon approaching.
- Find out what you already have and what it is worth - Boring though it is, you need to know what pensions and savings you do have to spot the gaps. Use the next wet weekend to go through your old paperwork and get up-to-date statements for those which are out of date. And if you can’t quite remember these details then visit the Money Advice Service website, which includes template letters for what you will need to get together to trace any lost monies.
- Find out how much state pension you can get - It is a valuable source of guaranteed income and for someone with a full entitlement, it is worth £159.55 a week for 2017/18; a significant sum for anyone. However, many people in their 50s or 60s who have workplace pensions may have been “contracted out” during their working life, which means their state pension income could be lower. What is essential is that people find out EXACTLY what they will get. People should check here on the Gov.uk website.
- Investigate any additional benefit entitlements - If your income is low enough then do see if there are any additional benefits you can claim to top up your income. Again, visit Gov.uk and check if you can apply for extra money such as a winter fuel payment, income support and carer’s allowance.
And for those who are younger and saving?
For both genders:
- Stay auto-enrolled into your workplace pension – If you have a workplace pension, this should be your first port of call for retirement planning. Workplace employer contributions mean that it will almost always beat other products, such as the Lifetime Isa.
For women:
- Please claim child benefit, or at least, file the paperwork - Women are more likely to have career breaks so please claim your child benefit as it gives you national insurance credits towards your state pension. And if one parent earns more than £60,000 and you are worried about incurring a tax charge, you can still submit the form and not claim (and you still get credited). Useful links on this include Gov.uk’s Child Benefit Tax Calculator which gives information on whether you will be hit by a tax charge. Its website also includes the claims form.
- Every woman should have her own savings pot – Keep this separate from your partner’s or family’s savings. The Isa allowance can be passed between married couples and civil partners on death and this means you can inherit your spouse’s Isa when they pass away and continue to benefit from the tax-free income and capital growth of the Isa pot. Make sure you stipulate clearly in each of your wills whether you intend on leaving your Isa to your other half. This will be a sensible approach from a tax planning point of view too.
- If you don’t have access to an employer pension, consider a Sipp - Women are more likely to be part-time workers and fall outside the remit of auto-enrolment. So, if you earn less than £10,000 with one employer, consider opening a Sipp. However, if you are employed and earn more than £5,825, you can ask your employer to enrol you into their workplace pension and you should be entitled to receive employer contributions from them too.
Maike Currie is an investment director at Fidelity International.
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