Knowing your financial future – 3 out of 4 female BS9 readers may not

The 8th March was International Womens Day and a day or two later I found myself reading a report from Hargreaves Landsdown suggesting only 29% of women have a clear idea of what their pensions are worth, compared to 44% of men and perhaps more worrying about 72% did not have an idea as to how their pension(s) were performing.

One of the fundamentals of financial planning and a key part of what I do, is to make sure that my clients are not in the dark about this. Enlightening them of when and what their retirement will look like and keeping people on track is key. It’s hard enough putting sums of hard-earned money away for those retirement years, so I always think:

  1. The least I can do is to make sure that money is invested appropriately for someone and
  2. The person knows the tax benefits and objectives in making those savings. Somehow savings are easier to make over time, if you know why you are doing it!

However it is a fact that it can be harder for women to reach their retirement objectives. There are numerous reasons why this is the case. Of course there are always exceptions, however:

  • State Pension provision depends on how many qualifying years of National Insurance (NI) contributions have been made. To get the maximum you normally need 35 years of NI contributions.
  • Raising a family can take many years out from the above as well as earning an income.
  • A much higher percentage of women work in sectors and occupations that are traditionally lower paid like Retail, Health and Social Care, Domestic Care, Nursery Assistants to name just a few.
  • Many of these occupations as well as being low paid, have poor work place benefits.
  • Women make up 75% of the part-time workforce.
  • COVID 19 has had a greater impact on many low paid occupations, through Furlough arrangements and job losses. It has highlighted the structural difference in many areas of work.
  • Of the 6.5 million unpaid carers in the UK, about 60% are women and a large number are in their 40’s, 50’s and 60’s – possibly moving from caring from a younger generation to an older generation almost immediately.
  • Women often think they will rely on a spouse’s or partner’s pension only to find that a Divorce or Separation throws that idea out of the window.
  • Often the impact of being widowed, particularly at a young age, perhaps while still having children to care for, can be significant financially.

So what can you do – and dare I say a few gentleman might also want to consider the following as well:

  • Dust off the pensions you have – particularly if nobody has looked at them for years. One thing that 2020 showed was the difference being invested in the right places made on investment returns.
  • Find out what state pension you are predicted to be getting and when from. You can always pay contributions to improve your entitlement.
  • Aged 67+ and on the old state pension system? Check you are getting the correct amount. There is a ‘married women’s rate’ which many thousands are not getting and some widows and divorced women on the wrong rate also.
  • If you are employed, will your employer increase their contribution if you do? That’s a good incentive.
  • What is your existing provision going to give you in retirement? Not enough? The earlier you recognise this, the easier and less expensive it is to do something about it.
  • Maybe give yourself better clarity of what you have, by consolidating numerous small pensions.

We have all been more aware during 2020 of our financial arrangements in the here and now, perhaps it’s time to take greater control over the future as well, by seeking financial advice.

Author: Phil James, Grosvenor Consultancy Ltd

Please be aware that the above does not constitute financial advice. We recommend that you consider your existing investments, pensions and financial arrangements and then take advice. The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested. Past Performance is no guide to future performance.

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