‘Many women had no workplace pensions!’ WASPI shares impact of state pension age changes

Gender pension gap: Why women are less secure in retirement

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The campaign group said suggestions for retirement planning now are “too late” for the generation of women affected by the state pension age changes – who saw their state pension rise from 60 to 65 in line with men, then 66. It comes amid a warning that thousands of women risk losing £225,000 in pension savings, if they retire at the same time as their spouse or partner.

New research from PensionBee highlighted the gap between retirement age and savings within couples.

Women leaving the workforce at the same time as her partner can have a detrimental impact on both her pension pot and a couple’s overall retirement savings as the males tend to be two to five years older.

The data showed men have typically saved up almost £440,000 in pension savings by the time they are 64. This is compared to the £300,000 accumulated by women of the same age. If they want to retire at the same time as their husband, they would have a pension savings difference of £140,000.

For a couple with a two-year age gap – so where the man is 64 and the woman is 62 when retiring – the pension savings difference would grow to £177,000. This is based on the woman having a pension pot worth around £260,000, according to PensionBee analysts.

Meanwhile, a couple with a five-year age gap – a man aged 64 and a woman who is 59 – could potentially have a pension difference of £225,000 worse off. PensionBee estimates a woman would have around a pension pot worth just over £214,000 in retirement at this age.

A WASPI spokesperson told Express.co.uk: “The WASPI (Women Against State Pension Inequality) issue is that women born in the 1950s didn’t receive adequate notice about an increase of up to six years in their state pension age.

“Most of these suggestions, while helpful for many, are too late for a generation of women who have sustained state pension losses of tens of thousands of pounds, as well as having to use their savings to support themselves to make up the shortfall.

“Many had no workplace pensions and provided the majority of childcare, which meant gaps in their National Insurance contributions.

“We call on the Government to make fair and fast compensation to all WASPI women affected, without any further delay.”

A DWP spokesperson said: “The Government decided over 25 years ago that it was going to make the state pension age the same for men and women as a long-overdue move towards gender equality.

‘Both the High Court and Court of Appeal have supported the actions of the DWP, under successive governments dating back to 1995, and the Supreme Court refused the claimants permission to appeal.”

Romi Savova, chief executive of PensionBee, said: “While coordinating retirement is a common goal for many, the persistent gender pension gap in the UK presents a significant barrier to achieving this, which is only exacerbated for couples of different ages.”

The retirement experts told This is Money that its calculations are based on ONS data and its own modelling system. They took into account median gross weekly earnings and median hourly pay to work out median annual hours of paid work and annual pay by gender.

It said: “We assumed annual pension contributions of eight percent, growth of seven percent, and fees of 0.5 percent, for consumers saving from age 25 to 64 and taking no withdrawals between those ages.”

Romi Savova, chief executive of PensionBee, added: “This huge disparity in pension pot sizes for savers within a five year age range highlights the urgent need for policy interventions and bold action from employers so women can enjoy the same level of wealth in retirement as men.”

It should be noted that the figures will not apply to every couple as there are always different variables when it comes to pension pots. However there are a number of practical steps that can be taken to help combat this pension gap.

A DWP spokesperson said: “Automatic enrolment has helped millions more women save into a pension, with participation among eligible women in the private sector rising from 40 percent in 2012 to 86 percent in 2020 – equal to that of men.

“Our plans to remove the Lower Earnings Limit for contributions and to reduce the eligible age of being automatically enrolled to 18 in the mid-2020s will enable even more women to save more and start saving earlier.”

These tips, derived from findings by PensionBee and LEBC’s ‘Gender Pension Gap: A Practical Guide’, could help people on their way to secure a more comfortable retirement financially.

Contribute to a pension if you take a career break
It is possible to continue saving in a pension plan, even while someone is not working.

This can include keeping up contributions to a former workplace scheme, providing it’s a portable group personal pension, where each employee has their own individual plan, according to LEBC.

Before taking breaks, people should maximise their pension savings and mop up annual allowances from earlier years.

Stay enrolled in a pension during maternity leave
Becoming a mother is a common reason why women tend to fall behind in their retirement planning compared to men, LEBC says.

If possible, women who go on maternity leave should stay enrolled in a workplace pension scheme. LEBC suggests this is important because quitting it costs more in lost employer contributions and tax relief than can be saved in the short-term.

 

It’s possible to can claim free credits towards the state pension by signing up for Child Benefit, even if the family earns too much to get the payments.
People can tick a box to do this, without having the hassle of filling in a tax return.

Parents, mostly women, can lose huge sums in state pension by not claiming Child Benefit because if they sign up late, their credits are only backdated by three months.

Make sure the non-earning partner claims Child Benefit under their name, as the free credits are not needed by someone employed and building up a National Insurance record already. It is possible to swap credits between partners if they make this common mistake.

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