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.

@bingowingsandthings if you start hanging out on pension forums, that’s often called “The Number”

And it’s different for everyone.

• will you have your mortgage paid off?
• how much state pension will you have?
• how lavish a lifestyle do you want?
• are you on your own? (although you can’t guarantee anything with a partner)

It’s best to work out what you need first. Be realistic - if you know you can’t save much then 3 foreign holidays a year in retirement ain’t happening! Remember that your heating bill might be higher as you’ll be home more - but you won’t be buying new work clothes, or maybe spending out on commuting costs. Remember you’ll still be paying income tax even though it’s pension income, but after 67 no NI. You can take 25% of your pension tax free though - either in a lump sum, or 25% tax free on each withdrawal.

Say you work out that your mortgage will be paid off, and you want £16K a year gross. If you have (or are likely to have) a full state pension, you need an extra £7.5K a year.
You mention age 60 - you also need to factor in extra money to bridge until your state pension starts. For me, that’s 67.

A quick way to estimate it is to look at annuity rates. You used to have to buy an annuity. That’s where you use your pension savings to basically buy a promise to pay X amount until you die. It will be adjusted based on your age, your health, etc. You don’t have to do that now - you can just leave your pensions invested, and drawdown money whilst the rest still (hopefully!) grows.

I just looked at an annuity calculator on Aviva’s website. To get £7500pa for life from age 67, you’d need £135,000.

That’s just to give you a rough number. There are other options. And that doesn’t cover your age 60-67 period. Just things to get you thinking.

@NationalAnthem paying in dividends makes me wonder if you have your own company? In which case, there may be tax efficient ways to get your company to pay into your pension on your behalf. I’m way out of my knowledge zone there, I only know that there are “things” you can do, but not what “things”

I can recommend the Money Saving Expert forum - pensions section. So very clued up people there!

@Ellisandra yes I own shares in dh's company but I also work for dh now - I have always just relied on dh's pension plans (and they are very complicated too) - which i know is naive and a bit reckless so we are trying to address that now.

@Ellisandra The company can pay into my pension - but it must pay me minimum wage - they cannot pay all my salary into my pension.

@Gatoadigrado if it was so good why didn’t they offer it to married men as well? Yes they were offered proportion of husbands pension but what if the marriage ended? Luckily my mum and Dad are still happily married.

gin- you’re determined to make out that women have been short changed when in fact as far as the state pension is concerned, for many years they had the huge advantage over men of getting their pension 5 years earlier - despite the fact that statistically they’d live longer! The half stamp was something additional offered to women IF they wanted it. They could continue to pay in more than double that amount if they chose. Some women chose to reduce their NI contributions. The fact is, people don’t all make the same choices.

As others have said, some people opt out of their company pension schemes because they’d rather have a few hundred quid more each month in their pocket in the here and now. It’s their right. Personally I think that’s crazy but you can’t deny people the freedom to make their own decisions.

Why wasn’t it offered to both men and women, why just married women? It sounds very sexist, don’t worry, your husband will pay for you. How patronising!

Absolutely it was sexist! Just as having pensionable ages 5 years apart for women and men was sexist! I don’t think anyone is arguing that sexism has never existed.

The point is, plans to rectify this, and also the pension reforms which were needed to allow for the fact people are living much longer, have been discussed for years and tbh you’d have to be seriously burying your head in the sand to ignore it.

Women only feel it impacts more on them because the system was stacked in their favour to begin with, age wise. The reforms have impacted on men as well... men who were expecting to retire at 65 are now having to wait longer - the difference is that they never had the historic prospect of getting their pension at age 60!

What this thread really highlights though is how unwise it is for anyone - woman or man- to rely on the state to fund their retirement. I think any adult who hasn’t made other arrangements as well as paying their NI is nuts quite frankly.

I wish people wouldn't keep harping on about the fact that at some point, women were given their pension 5 years before men.

that is of no consequence to the situation we are discussing here, which is that we thought we'd get a pension 7 years before we are actually going to get one.

It’s absolutely entirely relevant actually!

And yes I’d love to be able to draw my state pension at age 60, god knows I’ve paid enough in NI over the decades! Would be nice to just have to wait til 65. But I’m aware of the need for pension reforms and tbh I always thought it completely anomalous that men and women has different pensionable ages anyway.

It isn't relevant to me.

I have to wait till i'm 67 to get the state pension when it always used to be 60.

I makes no difference to me whatsoever how old anybody was when they got their pension in the past, my point is that I've not had enough notice for this massive change.

Legislation to bring women’s pension age in line with men’s was part of the 1995 pensions act, so tbh it’s hard to have much sympathy with anyone who’s seriously been imagining they can get their pension at 60.

It’s true that later legislation accelerated some of the timeframes, but we’re still talking years.

Of course it’s frustrating when you end up not getting such a good deal as you thought you’d get, but I don’t honestly see how anyone can claim they didn’t see this coming.

Gatoadigrado has made some excellent posts.

NotSuchASmug - of course it is relevant. Of course there has been lots of notice (I am in my 50s and disappointed that I'm not even going to get a bus pass, let alone a pension until I'm 67, when, in my 20s, and 30s I'd sort of assumed I would be retiring at 60), but Gatoadigrado is right.

We’ll have to agree to disagree. Do you know why there was an age difference for men and women for their state pension in the first place?

Do you know why there was an age difference for men and women for their state pension in the first place?

I was just wondering which bright spark thought that one up in the first place lol.

And do you know why they decided to change it?

IMO it’s much more important to get on the property ladder than start a pension.

They decided to change it because when the original state benefits was developed, people died younger, even 5 years after retirement.

Now people live longer it isn't sustainable to pay pensions for 20 or 30 years. I get that, I really do. I just wish the transition had been slower.

I think that's a whole other thread Verily1

This was the reason

In general when getting married, men would be older than women and this was an attempt to allow couples to retire at about the same time. How romantic? Well, who would look after hubby while he was knocking around the house if the Missus wasn't retired at the same time? Who'd supply him with cups of tea and little snacks... he certainly couldn't do it himself, that would be unthinkable!

And the reason why it was changed originally:

1995 - women's state pension age to be equalised
Following pressure from Europe, the Conservative Government was forced to announce plans to equalise state pension age for men and women. The timetable was the most relaxed possible and would raise pension age for women to 65 slowly from April 2010 to April 2020.

Gin it was so that he would be eligible for the married couples pension. If his wife was under 65 -the age as it stood for both before 1940- he /they would get less money. By making it 60 for women that would help most couples.

Many men died soon after retiring anyway.

I don't think this would be something I would lay at the schools door, I will educate my child on this. The schools simply can not be responsible for teaching our children everything.

I very much doubt there will be a state pension even at the point of my retirement (at which point the age will probably be about 95) never mind once my son is of an age of retirement.

Pension schemes are not the only way you can make provision for your retirement. I have seen people loose tens and tens of thousands of pounds in private pension schemes.

Thanks notsuchasmug and ellisandra

That's really helpful, £100k difference though - I'm not sure I could hope for £250k so maybe I'll work to £135k!

Mortgage will be paid off. Not expecting luxury just bills paid, food covered necessities. Currently one child.