To say that every woman on MN should read this article

[itsgoodtobehome]

In this week's Grazia - 'Why women need to wise up to the pension penalty'. It is really quite shocking, and I read so many threads on here about women who stop working when they have children, and I think especially if you are not married, you really need to read this.

A couple of things that jumped out at me:

'it will cost you about £25,000 in retirement savings to take year-long maternity leaves for two children in your early thirties if you earn the average UK salary (£30,000) and stop paying into your company scheme while you are off. This rises to a £47k hit if you go back to work part-time until your children are at school'

Also:
'If you aren't married, you are not automatically entitled to any of your partner's pension savings if you split up or he dies.'

It's not something we always think about in our younger years, but make sure you protect yourselves ladies, especially if you have children but are not married.

DH and I are a bit obsessed with pensions. It's just not something that's discussed much in your 20s and 30s I don't think, and I find them SO confusing. I've been paying into one since I was 23, thankfully having kids young in my trainee days meant my short career breaks were during my lesser paid years. I was back full time in the public sector at 27, although have been in the charity sector the last few years. I have just taken a new job in the civil service with the pension at the fore front of my mind which may seem a tad crazy for early 30s (the job looks good too and is part of may career plan).

When I talk to friends they think I'm insane to worry about my pension. I don't obsess, but we have a plan to make sure we have our house paid off and 2 good sized pensions (DH is military) but I'm reassured to know if we don't work out, I have a good one too. I don't think pensions are discussed and explained enough.

Also, I have been SHOCKED at the difference between public and private sector pensions, which I'd never really looked into before. The disparity is huge (where I';ve worked at least), I've largely been public sector, done a stint in the private sector for three years, my employer would only match up to 6% so when looking for jobs now I find out the pension package and add it to the salary to do a fair comparison. And this is why I've gone into the civil service, the bump in salary is huge, even when comparing my job to the private sector.

I'm not sure it's right for public pensions to be as high as they are tbh, but well if you can't beat them....

Sorry a bit of a digression from the female issue really, I guess I would just say make sure you're looking into the pensions when job hunting, especially if you know you have gaps. And if you're getting divorced and have spent time as a SAHM ensure the pension is discussed in proceedings, it is not automatically "his".

mrsmuddlepies I agree. In the absence of very specific circumstances which make working impossible, it’s a risky situation. Yet so many women seem to end up working only part time, or ‘underemployed’, working in low paid jobs way beneath their capabilities, long after their children are in school. I’ve had female colleagues who never return to full time work, even after their kids have gone to uni or left home!
I suppose it would be hard to adjust to full time work if you’ve been part time for so long. Then pensionable age creeps up on you and you realise you’re up shit creek.

Avalanching - good points, though remember pension reforms have the affected public sector and many of those gold plated pensions won’t be nearly as good any more. Also you often pay higher contributions (public sector here, over 11% of my salary goes in!.) But you’re absolutely right that pensions are something we should all discuss and plan for. It’s so easy to bury your head in the sand.

I think the article refers to your contributions. The employer contributions continue, but that is only half. The rest is your salary deduction. I paid additional voluntary contributions when I worked full time, and I spent most of my 30's on maternity leave or part time, so who knows what my pension would be. I have a teachers pension, a local government pension and a police pension, so will get 3 tiny amounts at this rate! You will get a state pension if it exists when you retire, but it won't be the full amount unless you've paid enough nic.

Who here on £30k has £200/month going into their pension?

Another one here on 30k with 200 going in the pot each month. I pay about 80, my employer pays 100 and tax relief pays the other 20.

The whole thing seems pointless though when I look at the calculation of what I can get. It says £4,230 a year... before tax... allowing for inflation, payrises & investment growth. It's peanuts really and I know I need to increase my contributions but I just can't afford it.

@Gatoadigrado I will be paying 5.45% and getting 27% ish (only a middle earner atm).

Who here on £30k has £200/month going into their pension?

Surely most people on that salary if utilising the pension open to them?? I have a very basic private sector pension atm on a similar salary, I pay 6% and my employer pays 6% so I easily have over £300 a month going in.

Self employed here and rather less than full time (partly for my one mental health reasons, partly needy offspring). I earn around the £30k mark and am stuffing about £800 a month into my pension. No employer contribution, obviously.

I do have a small final salary scheme from years back, plus an ISA that gets peanuts in interest but at least won’t suddenly dip with the stock market.

It’s inadequate and too late to grow much, but it’s something.

Two of my teenagers do have pensions set up. Must get the older one to do so as he’s likely to be a low earner.

I think as most employers match like for like a lot of people pay more in. I pay 5% because my employer matches up to that so the way I see it it’s free money.

One thing I always think when someone says that they can 'afford' something is, 'ok, but is your pension sorted?'.

I put a large lump sum unto my pension every month. From conversations with friends on similar incomes, this seems to largely explain the disparity between me saying I can't 'afford' something vs them spending the money.

I don't spend money on regular haircuts, having my nails done, buying expensive clothes and hardly any make up (all typically female expenditure pushed as something to 'bring us up to scratch' to society, by the way). I do spend a big chunk on my future. That is non-optional spending to me.

I moved into the public sector recently & I too didn’t realise how good the pension. My contribution is 20% a month with 3/4 coming from the employer.

I was self employed during maternity leave and had a big gap in paying into a private pension. I paid NI throughout of course.

I now have a workplace pension but starting it at 39 wasn't ideal.

thecats I would love to up my pension contributions but I really can't. I cut my own hair, don't own any make up, don't do anything to my nails, only buy clothes if my old ones are beyond repair and might go on a night out once or twice a year. We don't have netflix or sky or amazon this that or the other. If we go on holiday it's to stay with family. At the moment the total of my life savings is £25. Our mortgage is paid and I do have a workplace pension that will pay peanuts so that's something I guess.

A lot of women work freelance because it's easy to fit around kids. I doubt they earn enough to pay into a pension. I don't feel like I do, but I do pay into an shares ISA each month. Fortunately I've had well paid jobs in the past with reasonably generous employers so I have a reasonable pension fund.

MythicalBiologicalFennel

Oh yeah, that's not my point! My point is I hear a lit of people talk about whether they can afford things on the basis of 'money in the bank'.

My approach is that personal economics are a total ecosytem - you have to take care of the big picture first.

I often see threads here, where someone is saying that after childcare costs they'll been earning no more than if they didn't work and I think, argh, I doubt you've factored in the pension implications (and I say that on the thread). I'm an expat and currently not entitled to a State pension anywhere - the thought of having nothing at all to live on at all is terrifying.

Smellbow and thecats - totally agree with you both. You need to look at the bigger picture, not just the here and now.
I worked for several years for no immediate financial gain (equivalent of my take home pay on nursery ) BUT 20 years down the line I can so see the benefits of remaining in work during that really tough period.

@smellbow absolutely, also the overall affect on your career, the impact it can have on progression and therefore salary overall. I tripled my salary from the time my eldest was 1 to my youngest starting school, the time many women step out of the work place. It would have had a huge impact on my finances if I had of decided to stay home when at some points in that period I (we) was barely breaking even after childcare costs.

I am starting to worry about my pension. I am early 30s but have done a lot of contract work and had a lot of jobs so lots of pensions with very little in them...

Assuming I need to contact an IFA to try and figure out what do do? I am now in a job I expect to retire in so hoping to bump up my contributions once DS is out of nursery (well until his free hours kicks in).

The difference when you take ML is so big I was surprised. My Mum was a nurse and had 3 children and had 6 months ML for each of us. Her friend (same hospital, same role) didn't have children.

They both retired a couple of years ago. Mums lump sum was less than half of her friend and her monthly is about a third less of her friends. All for 18 months total of ML!

My DH and I are now both self employed and have just reorganised our pension provision and have also sorted some investments. I have also made sure that my NI contribution record has no gaps and paid for a year I missed post redundancy.

It's so important to think about as early as possible.

VapeVamp - There’s some misinformation somewhere there! ML isn’t going to impact your pension like stopping work or going part time will. It’s total rubbish that taking 3 lots of ordinary ML would leave you will a lump sum more than halved and a third less on your monthly pension payments. Simply not true.

I work for a company that has been all over the press recently, and has had previous issues with pensions. If this company eventually goes bust, will i lose what has been contributed to this pension?

A lot of working people aren't paying anything into a pension. At least I hear that often so I think it's true.

Assuming 2% gain over inflation for 35 yrs, I worked out the net amount going in has to be £520/month for the missing 2 years of maternity leave.

the person with £1100 going into their pension each month only needs to work 2 extra yrs to get back the projected missing £25k.