50% OF WORKING WOMEN HAVE NO PENSION
(22 March 2006)
research from Barclays Financial Planning has revealed that UKs
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) arent 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.
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.
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.
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.
Barclays Financial Planning research shows that the average female
worker in the UK would like to retire at 58 but predict theyll
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**.
adopting a cant save, wont 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 theyll cope
financially in the future.
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, wed 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 were
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.
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.
ABOUT THE PENSION CALCULATIONS
calculations taken from the FSAs 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.
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.
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.