Pension contributions are important – especially for women. Some of us may be happy to have the 2018 tax year behind us and the barrage of various investing and savings strategies peppering the tube and TV. The new 2019 tax year brings an opportunity to continue improve one’s financial viability through pension savings, even though retirement may seem far away.
As of April 6, 2019, there are increases to minimum pension contributions for employees (and employers) in automatic pension enrolment schemes. For employees, the minimum contribution increases from 3% to 5%. And employers’ contributions go from 2% to 3%.
A concern with these increases is that some of the people most vulnerable to not having enough savings to retire will opt out of pension contributions. This especially impacts women with caring duties, expenses and lower incomes – because they need the disposable income to meet today’s costs of living. In effect, they could be making a bad situation worse by opting out of what is otherwise a very sensible savings scheme.
Several factors make things challenging for women in particular: the gender pay gap, compounded by women on average saving less than men compounded by existing pension deficits for their age and earnings It means that many women lack sufficient savings to pay for their own retirement and old age care. Here are some startling statistics:
- Median pension wealth for married men is £53,000 and for married women is £10,000
- 55% of women age 30–49 have not thought about how they will pay for their long-term care
- Over the last decade men’s occupational pensions have risen 83% more per week than women’s – £23 for women and £42 for men
- The average cost of residential care for women aged 65-74 entering a care home is £132,000 versus £82,000 for men
- 71% of divorced people did not discuss their pension during divorce proceedings
- The median pension wealth for divorced and separated men and women is £30,000 vs £9,000 and £12,000 vs £0 respectively
Saving for retirement can be a hard thing, but not having enough to retire and support oneself can have devastating consequences in later life. Hopefully for vulnerable groups like women, the increase from 3% to 5% for minimum pension contributions won’t be a hurdle too high – the reward being a more secure financial future.