To think that a lot of people don't seem to understand that part-time work = much smaller pension?

[AHedgehogCanNeverBeBuggered]

I work with a lot of women in their 50s, several of whom have expressed their shock/disgust at how little occupational pension they'll be receiving when they retire, even proportionally compared to FT workers. They have all had DC then remained PT even after the DC became teenagers and eventually left for uni. I didn't want to say anything to them when they were complaining to me how hard done by they are, but surely it's basic maths to know that the more you invest (and the earlier) the more it grows and therefore the greater the pension? How can they now claim to be so surprised and hard done by?

I wonder if you will be eating your words when you are in your early 50s op?
there but for the grace of god and all that

As someone said up thread, it''s not about the hours you work, but your salary, your contributions and starting a pension early.

It is important for the next generation to get good jobs, negotiate good packages, look for jobs with good employer contributions, and put as much money in as they can. (Get married, get their name on the house etc)

I know this will be hard considering housing costs and student loans but MN can be a pretty sad place sometimes were some women are left with nothing and no way out.

I predict there will be many more pensions scandals. Minor ones, compared to the big ones that have happened, but I predict there will be more , in the next 10, 20 and 30 years.

I don't trust pensions AT ALL

People putting in more and more thinking that it will be enough, being told/predicted that they will receive x amount per annum, and then for one reason or another, 5, 10 years later, they are told that there pension pot isn't worth as much, and they will get less annually.

I am joking, but sometimes I wonder if we all would have been better off stuffing any spare notes in a suitcase under the bed.

Many more people have SIPPs now which reduces the risk as it's spread between various providers.

Anyway, I am determined to live to be 120 to beat the annuity algorithm

@Oblomov18 I suspect you are right. It’s about balance to me. Not all eggs in one basket - I am focusing on overpaying mortgage too and house will be big enough that “downsizing” should be an option. Will also try and build up savings. Am also planning on keeping working as long as I can in some capacity or other - most of my grandparents did some kind of work (consultancy or similar) even after they retired.

But life is for living now too, Old age is not a given. We need to strike a sensible balance between living now and saving for the future we hope to have.

I think some people are jumping on the OPs post and conflating it to something it isn’t.

I took it that she’s referring to a particular profile of women (and that’s not being sexist it’s just a fact that it’s very much predominantly women) who remain in part time work long after their children are in school and beyond. I am in my 50s and know a number of women like this- and they would admit that they are the only beneficiary of this arrangement. Their children have left school, or are older secondary age, they don’t have caring responsibilities and are happy to acknowledge that they choose to work part time because they want more time off for themselves.

AND there is absolutely nothing wrong with that (as long as their partner is happy with that balance) but it does seem strange when they are then surprised that their pension pot is really low. I guess maybe their mindset is that they know they’ve been working 30 years, and fail to take into account that if they work,say, 3 days a week, that’s the equivalent of only 18.

The op isn’t talking about women who can’t work because they have a severely disabled child, or who don’t work but have some amazing trust fund etc so I don’t know why people are jumping in to defend themselves. It’s a very specific point about a particular group of the workforce, and it’s a very valid one.

The thing is, with cash you're guaranteed to lose 2-3% per year (inflation). On pensions, you get the tax break before you even start, so you get a 25% return in the year you put it in (had a wine so check my maths on that!!) courtesy of the tax man. Spread it around providers and you dilute the risk. Plus, you cant get it back so reduces temptation to cash it in during the inevitable MLC and buy a holiday to Zanzibar.

I think what needs reinforcing is the value of staring young, even if its 25 quid a month because the compound effect is staggering.

Part time or full time isn't the issue, it's the amount you were earning during that time that affects your pension.

I was part time (2 to 3 days a week) while DC were small but still earned more than national average wage so full NI contributions. The tax man isn't interested in what hours I worked to earn that.

I think most people are talking about occupational or private pensions not NI contributions. I pay shed loads into that too but I’m not expecting anything amazing as a state pension

Thank you Babbity you said what I meant much more eloquently than I did!

Well I don't understand why it would be proportionaly less.

Surely if they work 50% their pension will be 50% of a full time employee?

No, not necessarily. Some schemes calculate the employers' contributions at a different rate for p/t and f/t workers, for example. Or the pensionable salary might be the same but the years of reckonable service being proportionately reduced can have a really significant impact on the lump sum available on retirement.

It really isn't as simple as "I work 2.5 days a week therefore I will get 50% of the pension that my friend who does the same job at the same wage but 5 days a week will get"

The penalty for part-time workers can be particularly harsh for final salary schemes (career average schemes help iron out any sudden drops in income in later years of employment)

And of course child care vouchers reduce both your tax bill but also (potentially) your pensionable salary. Something else that tends to fall disproportionately on women...

Do you think MNHQ would be up for a web chat with a pensions expert? Not to give individual advice of course, but to help with general queries, with particular reference to aspects that particularly impact on women?

I think it would be really helpful, given the fact that a high proportion of women don’t have sufficient finances in place for their retirement

Yanbu OP . The pension gender gap is worse than the gender pay gap, as pp have said a perfect storm of lower pay, fewer hours, less career progression, salary peaking earlier (40 for women, 55 for men). There was a really interesting article in the Economist about it last summer.
After reading it I sent it to my team members and recommended they prioritise their pensions as it basically said overpay in your 20s.

To whoever said women shouldn’t be martyrs and always be the one to work part time etc, it’s very difficult to have those conversations once a baby is there (or enforce it if DH changes their mind). Women are socialised (and expected) to put others first. So it’s acceptable for a man to say he doesn’t want to damage his career for the baby not to be in nursery full time but a woman is expected to put the babies needs first.

"9% is only a relatively small part of the cost of a typical final salary (or career average, if that applies to you) pension. Contribution rates of 30% or more are required."

I pay 9%, but my employer also contributes 14%, so the actual rate is already 23%. It's a career average pension and it's less generous than it used to be, so it should be cheaper than the existing final salary pensions. (It should also be noted that I would immediately earn 33% more if I did the same job in the private sector, so my pension goes some way to redressing that balance.) I've been paying this since my mid-20s, so there's more than enough time for those contributions to appreciate in value.

"current state pension is only about six thousand a year less than I have now. "

ONLY six thousand? That's quite a big difference. I know my life changes when I earn 2k more or less than I do now. 6k would make a big difference, especially if it's between just about surviving and having a decent life.

You could take the attitude that a pension it a big risk... If you die young! Not everyone gets thier pensions. So for me, I'm worse of in old age, but better off now, because I wanted to be part of my Childrens upbringing as a SAHP (that's not a dig at working parents, it's just the decision that I have made).

£6k is a lot depending on your circumstances. If you no longer have a mortgage to pay, get rid of the car and of course are no longer making contributions into a pension scheme you can easily manage on £6k less as those things will be more than £6k combined.
Not to mention free bus travel and free prescriptions.
State pension isn’t a lot though.

"The point is that they didn't do part-time jobs so that they could watch telly the rest of the time, did they?"

Well, the OP is about women who stayed part time even when their children were grown up. I would have thought that those women have husbands who earn well though.

"and it's very rare to see anyone advising them to think about the pension implications as well as the immediate drop in take home."

What? You see it all the time to the extent that I had to ask what they meant and point out that you can make NI contributions even when not working, to which I got the reply that they meant occupational pensions. Workplace pensions have only become compulsory recently so posters were just assuming that everyone had them.

"there is a state pension, it is not That bad"

It's based on the idea that you own your home. It's not enough if you have to pay rent. I'm not sure the other benefits such as housing benefit will still be there in a few decades' time and whether they will be enough.
The UK state pension is one of the lowest in western Europe.

Rose my DM did die young. She was a SAHM and never worked FT / out of the home when I knew her

However - she had a private pension that my DF had contributed to all that time

It may have seemed a very 'traditional' setup, yet they had openly discussed things like pension implications - SAH doesn't have to mean you have no pension

No pitter patter, but private pensions are not great any more, and most women aren’t in the position where they can not work or just work part time for a huge swathe of their adult life while having a partner who is able (and willing!) to chuck a massive amount of money each month into a pension for her!

Like pp have said, there will always be exceptions such as women who don’t work and have some incredibly fortuitous private means, but the fact is that a very high proportion of women (much higher than men) are not adequately prepared financially. What’s most scary is how few of them realise until too late to rectify the problem

We are agreeing. We need education

No need to assume it was massive- isn't that part of the mental block around savings/pensions? "Why bother I can only save £5/10/20"

A lot of interesting facts have come out on this thread. It is obvious that there is a need for pension advice to be transparent and in the public notice, for all women.
Often information is ‘in the public domain’ but hidden in Government jargon.

One thing I’d like to point out, and apologies if it’s already mentioned, is that the state pension is taxed.
If you are in receipt of another pension that brings you into taxable income then the state pension is added to that for tax purposes. The tax however, is taken from the other pension, so it looks like the SP is untaxed. Several people I know were shocked that their other pension seemed to reduce when they got to SP age.
This is particularly hard on anyone whose other pension might just be above the tax threshold.