Tina Talks: Pension savings and the gender pensions gap

Tina Winter and Dr Ylva Baeckstrom

Recent research has shown that the gender gap between men and women doesn’t just apply during working life; it also extends into retirement.

So why is this? To explore this further, our Financial Planner, Tina Winter, recently spoke at an open event at King’s College London Business School; “Investing to secure your financial future”. Aimed at, but not exclusively for, women.

The gender pensions gap

Research undertaken by Dr Ylva Baeckstrom, a lecturer in Banking and Finance, and the event organiser, shows that women are less likely to save into a pension. If they do, their pensions typically tend to be worth less because they take lower risks with their savings, limiting their potential for future investment growth.

Career breaks due to children or caring responsibilities also have an impact on a woman’s potential to save for retirement.

This teamed with the fact that women statistically tend to live longer than men, means that their smaller pensions pots also have to last longer.

Tina’s session covered the basics of pension savings and highlighted the importance to start saving from an earlier age.

Here are a few eye-opening facts to take away from the session:

  • Although the gender pensions gap is closing there is still much work to be done. On average, women are paid £260,00 less than men over their careers.
  • The typical young woman today could end up with a shortfall of £78,000 in retirement savings compared to their male counterpart. This could equate to a total of £3,000 less in income for each year of retirement.
  • It’s extremely important to make sure you get the full 35 years of National Insurance Contributions to receive the full State Pension
  • From April 2019, the minimum contribution into a workplace pension is 8% of earnings– min. 5% paid by employee and min. 3% paid by employer. But this 8% is not enough! People need to be increasing their contributions as and when they can afford to, ensuring they can live comfortably in retirement.
  • Last week’s news update discusses the UK Retirement Living Standards recently introduced by the Pensions and Lifetime Savings Association, which aims to help the UK public better engage with their retirement savings. From these figures, you can see what a difference starting early and saving a little bit more makes to your eventual retirement position. If you haven’t done so already, then please do have a read here.

Our top tips for a comfortable retirement

One thing we hear a lot from our clients is that they wish they had started planning for their retirement earlier.

So, if you, or anyone you know, have yet to explore your pension options or saving plans, here are some helpful tips to get you started:

  • Get a State Pension forecast to see how much State Pension you can get, when you can get it and how to increase it (if you can)
  • Find out about personal pension options
  • Go to your employer’s pension scheme website to find out about the scheme
  • Know how much your pension pot is worth today and what it will be worth at 68 assuming your current savings rate. Why not try this pension calculator tool
  • Decide how much you want as an annual retirement income
  • See if there is a shortfall and if so, how much you need to save to bridge this gap

If you would like to discuss your pension savings or any other aspect of this article, then please get in touch with us now and speak to one of our financial planners.