New research from Barclays Financial Planning has revealed that UK’s working women are leaving the pension action to the men, potentially putting them in future financial strife. The research reveals that over half of working women (52 per cent) aren’t paying anything into a pension. Contrastingly, two-thirds of them (63 per cent) are somehow determined to carry on their current lifestyle past retirement – something which seems impossible if the worrying gulf between dreams and reality continues to grow.

The Turner report highlighted that fewer than one in five women qualifies for the Basic State pension in their own right and two million women have failed to build up any entitlement at all. This is because women often have gaps in their National Insurance contributions as a result of being carers or raising children.

Whilst the Turner report recommends that the State pension be made available to everyone at the age of 75 regardless of contributions, it is still vital that women make their own personal pension provision or face a retirement which will in no way meet their expectations.

Of those women savvy enough to have set up a pension, the average monthly contribution is £35, compared to a much higher £73 average for their male counterparts. In addition, whilst 14 per cent of men are paying between £101 and £200 each month into a pension, just 5 per cent of women are making the same contribution.

The Barclays Financial Planning research shows that the average female worker in the UK would like to retire at 58 but predict they’ll realistically be retiring at 63 with a desired annual pension income of £15,570. However, in reality, a single, 30-year old woman with a target retirement age of 63 would have to increase her monthly savings from £35 to around £217* to reach her expected income of £15,570. There might be additional income gained from the Second State Pension, which would contribute towards this, but not everyone will receive this pension**.

Despite adopting a “can’t save, won’t save” attitude, women are still worrying about their future finances, with 39 per cent being anxious about their retirement financial provision. Those women who are widowed or divorced are understandably even more worried, with 49 per cent remaining concerned about how they’ll cope financially in the future.

Stephen Ingledew, Director of Barclays Financial Planning, comments: “Over the past thirty years, women have definitely become more financially savvy when it comes to debt and more financially independent when it comes to budgeting. However, we’d urge more women to think about preparing sufficiently for their life after work, especially if they have retirement dreams which they want to follow. Financial education is still very important, particularly when we’re seeing just over a quarter (28 per cent) of people reviewing their pension on a regular basis. With putting money aside for future retirement now competing with money for foreign holidays and girls’ nights out, it is easy to see how it seems less appealing. But the sooner you start, the less daunting it needs to be.

“It is particularly important that women understand what they can expect to receive from the State when they retire to give them a better idea of how much they need to save privately to ensure their desired standard of living. A good rule of thumb for men and women alike is to put aside contributions which, as a percentage of pay, are at least half the age at which they start saving for retirement. For example, if someone starts at age 20, they should contribute at least 10 per cent of their salary or if they start at age 30, it should be at least 15 per cent, and so on.”

MORE ABOUT THE PENSION CALCULATIONS

*All calculations taken from the FSA’s pensions calculator: unmarried female, aged 30; monthly contributions of £35. Assumptions: pension payments started at age 30; assumes no employer contribution, retirement income keeps track with inflation; no lump sum taken. Including assumed weekly potential Basic State pensions of £82.12.

The calculator makes the following assumptions specified by the FSA for use with stakeholder pensions, which are:

• Investment growth: Your pension fund will grow by 7 per cent a year until you retire.
• Inflation: The Retail Prices Index (RPI) will rise by 2.5 per cent a year until you retire.
• Pension fund charges: The company providing your pension will charge 1.5 per cent of your fund for the first 10 years, and 1 per cent thereafter.
• Income tax rebates: The Government will add a tax rebate to your contributions at the basic rate (22 per cent), so that every £1 that goes into your fund consists of 78p from you and 22p from the Government.
• Annuity rates: When you retire your pension fund is used to buy a pension income, called an annuity. We have estimated what annuity rates might be when you retire.
• Life expectancy: The average age that people are expected to live to.

**The maximum Second State Pension is £146.12 per week for someone retiring in 2006 if someone has made full contributions over their lifetime up to retirement.