Women aged over 50 have pensions just over half the size of men’s as lower pay and unpaid caring work hit their ability to save for old age, new research shows.
In the generation now approaching retirement, which has not had time to reap the full benefits of auto enrolment into work pensions, women have around £43,000 in private pots and men have around £82,000.
Some 25 per cent of women over 50 have less than £5,000 in their pension pot, compared with 15 per cent of men, according to the study by finance giant Legal & General.
Retirement finances: Lower pay and unpaid caring work take a toll on women’s ability to save for old age
Those who have built up a full National Insurance record could receive £9,300 a year in state pension at the current rate, aside from any private retirement savings, and the very poorest pensioners can qualify for pension credit.
If you are concerned you won’t have enough to retire on, Legal & General suggests ways to make up a pension shortfall below, or scroll down to read a This is Money guide to sorting out your savings.
Legal & General says that outside of pension wealth, women aged over 50 have around £29,000 cash savings on average, while men in the same age group have just over £40,000.
But the firm also cited Office for National Statistics data showing that women have a 28 participation rate in final salary pensions – traditionally the safest and most generous ones – compared with 25 per cent for men.
This is due to women making up just over two thirds of the workforce in the public sector, where final salary or career average pensions remain available, while they have been closed down by private employers.
Andrew Kail, chief executive of Legal & General Retail Retirement, says: ‘Our data demonstrates a significant difference between the pension wealth of men and women and raises further concerns about women’s finances at the point they reach retirement.
‘We know there are a multitude of factors that influence these figures, from the gender pay gap to the increased likelihood of women working part-time or taking career breaks when compared to their male colleagues.
‘We also know that the pandemic has likely increased this disparity due to the unpaid caring responsibilities that typically fall to women.
‘We need to do more to address this financial inequality but also to address the root causes that influence it, specifically the significant burdens our society places on women outside of their careers.’
Legal & General says people concerned about the size of their pension as they approach retirement could consider doing the following:
– Think about continuing to work into your 70s, or making a slower transition into retirement, steadily reducing the number of hours you work so your income doesn’t stop so abruptly;
– Track down old pension pots, because if you have had multiple jobs over your lifetime, the likelihood is that you have several out there and many go unclaimed;
– Work out what else you have to provide financial support in retirement in addition to your pension, such as property.
Legal & General surveyed a nationally representative panel of 2,000 over-50s in February.
How to sort out your pension if you fear it’s falling short
If you are worried about your pension and whether you will have enough, read a full 10-step guide to sorting it out here.
To get started, investigate your existing pensions. Broadly speaking, you need to ask schemes the following:
– The current fund value
– The current transfer value – because there might be a penalty to move
– Whether the pension is in a final salary or defined contribution scheme
– If there are any guarantees – for instance, a guaranteed annuity rate – and if you would lose them if you moved the fund
– The pension projection at retirement age.
You can use a pension calculator to see if you have enough – find This is Money’s here.
You should add the forecast figures to what you anticipate getting in state pension, which is currently around £9,300 a year if you have a full National Insurance record.
Get a state pension forecast here.
If you are tempted to merge your old pensions, check out some tips on how to decide here.
If you have lost track of old pensions, the Government’s free tracing service is here.
Take care if you do an online search for the Pension Tracing Service as many companies using similar names will pop up in the results.
These will also offer to look for your pension, but try to charge or flog you other services, and could be fraudulent.
TOP SIPPS FOR DIY PENSION INVESTORS
