Women and pensions

[Gin96]

AIBU to think women are short changed when it comes to pensions? The amount of women I speak to who don’t have a private pension. A lady I work with is 67, she only has a state pension and can’t afford to retire. Ladies in there 40’s with no pension at all, they don’t think it’s a problem as the state will provide for them. Why are we not taught in school about finances and pensions? As I get nearer to retirement age I am suddenly taking an interest and it is a mind field trying to work it out.

One thing that frustrates me about the local government pension scheme is that if you opt out or leave within 2 years, you can get a refund. This means that some people always opt out/leave near the 2 year mark and claim a refund, meaning that they will never have a pension to retire on.

You'd also be amazed at the amount of people on really good salaries that opt out.

Everyone knows when you stop working & earning that you will receive very little money from the state.
Therefore it is a good idea to have emergency savings, pension, ISAs, money in a jar, other assets

Why don't people save ?
Low wages, poor opportunities, uninterested, spend their money on other things, financial planning is boring, life throws unexpected issues etc

I too know people who have earnt well, but chose not to save

I know some people who have been retired 30+ years

Interesting thread but, my God, some of you and coming over as self satisfied and judgemental.

I have a question: I earn £62,500 p.a. so don't get Child Benefit. I'm sure I read on MN that I could pay enough into my pension to get CB but when I mentioned it to the pensions advisor he didn't know what I was talking about. Any ideas?

When the government in the 70’s targeted married women to pay less stamps and sold it as a good idea, raised the retirement age very quickly from 60 to 67 for women about to retire, women earning a lot less than men and only now slowly is this being highlighted, women expected to look after children and elderly parents, women not realising if you don’t claim child benifit your NI stamps aren’t paid. yes I think women have been sold short. The good thing is now all your accounts are accessible online and it is easier to do something about it.

If you are in UK look at www.gov.uk then at the child benefit tax calculator
It has a section about pensions

I'm not judgemental

Why do you think companies now offer employees the opportunity to join a pension by auto enrollment. It's to try to make people think about their future
People are living longer ( not necessarily heathier)

Companies offer auto enrolment because they have to by law! Not out of the goodness of their hearts!

And the reason the government has done this is to phase out the state pension, eventually it will be means tested

Sicario The local government pensions scheme is a "funded" scheme unlike civil service, police etc. But hey-ho, I guess you need to be a "moron" to know that.

I don’t think people are being judgemental. It’s basic common sense that the less you pay in, the less you’re going to get out.

Also, the pension reforms haven’t just happened overnight; the plan for years and years was to (quite rightly) equalise pensionable age for women and men. The only point of contention as far as I can see is where some women feel they were not personally written to early enough informing them that pensionable age had risen. But the information was out there, it was a case Of them not having been informed personally. I’m heading towards 60 and I’ve been aware for ages that pensionable age for women was raised to 65, and then for both genders to 67.

Tbh men were short changed for a long time having to wait 5 more years to get a state pension when their average life expectancy is lower than women’s anyway.

@JuneSpencer100

My first idea for you is to get a new pension adviser! When you say pension adviser, what do you actually mean? Hopefully not an IFA as they shouldn’t even be operating it they don’t know a basic like that!

CB entitlement is calculated on your net salary, net of certain things. One of those things is pension contributions. So yes - by paying more into your pension, you may reduce your salary enough to still be eligible for some or all of CB. I do exactly this - I pay about £6K a year via company pension contributions, then add more into a private pension. Then claim CB. As you’re a higher rate tax payer, you’ll also save a heap with tax relief!

I’m really curious about your pension adviser, I’d be reporting that to their superior. It’s more personal taxation and benefits than pensions, I suppose... because it’s a side effect of pension contributions. But it’s a basic, I’d expect ANYONE advising on pensions to be highlighting it to you.

I think the 'point of contention' is the tight time frame so that a 1 year difference in age can make 3 years' difference in payout. This is a particular cohort of women being affected now,not years down the line.

Whoever said they have a full NI record despite being partly contracted out ; that can be misleading. You need a pension forecast from the government to be sure that you don't need to pay any extra. I have no missing years out of my 37(!) but still need to pay extra to get the full state pension.

You need a pension forecast from the government to be sure that you don't need to pay any extra. I have no missing years out of my 37(!) but still need to pay extra to get the full state pension.

That reminded me to check mine. I have 29 qualifying years so need another 6 to get my full state pension assuming they don't change the rules yet again.

I took out my first pension when Stakeholder Pensions came in, in 2001 when I was 43. I was earning peanuts (below the tax threshold) but fortunately DH helped top up my contributions to the maximum allowed.

Since then, I have managed to build up to now having a decent amount in the pot.

Anyone in their 40s (or even 50s) without a pension fund, I would encourage you to start one if you can. Over time, regular contributions do build up - and if the stock market is kind, the investment will grow.

Also some people have suggested the half stamp that was offered in the past was some sort of con. But I remember discussion among friends of my mother and many of them were delighted to more than halve their NI contributions - they had more money in their pockets. It’s simply disingenuous (and patronising) to say women didn’t realise that by opting to pay a lot less, they would also get less out at the end. And wasn’t the half stamp some sort of trade off whereby they would be entitled to a proportion of their husband’s state pension anyway?

@Taswama there are shit employers of all sizes when it comes to pensions.

Before auto-enrolement came in many employers particularly small ones didn't make any employer contributions to their defined contribution pension schemes. That's if they bothered to set a scheme up up before they were forced to.

I worked for a large multi-national that put in something like 1.5% of my salary. The reason they did this was because I was under 30 I couldn't join their final salary scheme. They then closed this scheme 2 years after I started working for them. I then worked for SMEs who put in much more. One company put in nearly 9%.

Unfortunately auto-enrolement has meant employers who made reasonable contributions have often decrease their contributions to the minimum.

I don't have masses of sympathy (altho I did 10-15 years ago). My mother is 67 and she and all friends have been well aware if need for pensions for 20+ years. Numerous government campaigns, info from employers etc, general common sense. She was (like many in 80s) a SAHM but surely no one does that for more than 10-15 years? She returned to work when we were in school and had 25 years of work from that point on. Anyone who did no work at all while kids were age 12+ has not got a lot of sympathy from me and employers have been good at providing info on this for a long time

@Ellisandra You pay an amount after tax into your private pension and then receive tax rebate though your self-assessment is that correct? I think I need to do this too, as my employer is limited to the amount of money I can salary sacrifice into my pension - my employer needs to pay me minimum wage in cash and I want to pay all of my salary into my pension fund.

JuneSpencer100

another mumsnetter here who thinks your pension advisor should be reported to the ombudsman for not knowing that about pensions/child benefit.

I started working in 1950s. No maternity leave, had to leave work with P45 then. Got same job back a year later after having child, but part time. Part timers could not at that time join the work scheme, also l was advised to just do the 'married women s stamp. I did do a private pension of sorts, but don't get much at all from it. I do agree with PP that women who say it is not worth working when they have to pay for child care are being very short sighted. It is so much better now.

@NationalAnthem it doesn’t even always trigger a self assessment tax return!
I pay a set % into my company scheme, as it’s a Defined Benefit scheme (lucky me!).

I then have a private DC pension that I pay into. 20% tax relief gets added automatically - I don’t have to do anything to make that happen, the pension company add it on the same day I pay in, and reclaim it from HMRC.

However, I am a higher rate tax payer, so I can claim an additional 20%. You can go this as you say - by going onto self assessment, and getting a refund. However, if you know how much you’re planning to pay in during the full tax year, you can call HMRC and tell them. They then adjust your personal tax code, so you pay the equivalent less in tax through PAYE. So my monthly take home pay is now much higher (less tax) which enables me to make bigger private pension contributions. Literally, one phone call to HMRC and say “I’m a higher rate tax payer and I’d like you to adjust my tax code to reflect me paying £10K net into my pension this year please”. All done!

@Ellisandra - thank you for your reply. According to his business card, he's an "Independent Financial Planner authorised and regulated by the FCA" He works for a large national company brought in by my employers. I met with him because I'm only paying the minimum into my auto enrolment pension and need to pay more and would like to reduce my tax as well.

I asked if I paid, say, £13k p.a. into the pension, thus reducing my salary to less than £50k, could I then claim CB. He looked at me like this and said he'd never heard of that but would check with his office and let me know.

How much should we have in our pension pot ideally aged 60? I don't even know!

@JuneSpencer100 I honestly would speak to whoever in your firm was responsible for choosing the company that came in, to raise this. I wouldn’t expect and IFA off the top of their head to know to the penny how much CB is, or maybe (really at a push) to know the £50K & £60K threshold. But to not understand the concept of reducing net salary to take advantage of benefits? That’s shocking.

Here is a link from Royal London, a major firm. Note that it isn’t aimed at you and me - it’s aimed at advisors with clients! I wouldn’t trust an advisor who didn’t know a basic like this, to give good advice on other matters.

adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/child-benefit-avoiding-the-tax-charge/

@Ellisandra I believe i am a higher rate tax-payer too - mostly received through dividends so that might complicate things and my salary is not fixed as I submit weekly timesheets to claim for hours worked, as and when needed that why i thought I may have to go down the self assessment route.

bingowingsandthings

I would say by 60 you need about £250k in your pot. Or at least be aiming for £250k at 67.

That way, assuming you live for a further 20 years you can, broadly speaking, draw down £12.5k per year.