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Serving the Teesside Business Community | 59
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In education
We must educate the next generation
of women on independent financial
security. Not only parents, but also
education providers can help to build
financial confidence in young women,
teaching them the importance of
managing their own finances and to
build financial resilience.
Working women
Following maternity leave, a number of women reduce
their hours of work, often putting their careers on
hold, meaning less money towards their retirement
provision. I often see this with my clients, many of
whom are professionals including solicitors, accountants
and company directors. Flexible working should be
encouraged to continue career success, along with
higher earnings and increased pension contributions.
Always join the company pension scheme. Employers
are legally obligated to pay into a pension for workers
aged 22 to 65 who exceed earnings of more than
£10,000. The current minimum contribution is 8%, of
which 3% must be paid by your employer.
Divorce
A pension asset is a matrimonial asset like any
other factor of division between a divorcing
couple.
On separation, understandably couples focus
on family issues and visible assets like the family
home.
Very often, though, one partner will have
pension rights that are less visible but can be
just as valuable as their family home.
Since 2000, the spouse has a legal right to
pension share – always take legal advice.
Women being risk averse
Sadly, women usually take less risk than men when
investing. Deposit-based investments are at risk
themselves by not keeping pace with inflation.
Saving for retirement is for the long term, therefore
a diversified balanced risk portfolio will more likely
enable your pension pot and future income to
maintain its buying power.
Women should not settle with the annuity offered
from their existing provider at retirement, they
should look to take advice and see what is available
on the open market, as it may provide a much higher
income.
Conclusion
It is quite clear that more needs to be done to increase awareness of retirement
planning and pensions for females, and the opportunity to build an adequate pension.
At Active we would like to help bridge this gap to support women planning for their
future retirement and care needs. Women deserve independent financial security in
retirement. Let’s collaborate together, spread the word and educate women of the
need to consider retirement planning and pension advice.
‘The information provided must not be considered as financial advice. We
always recommend that you seek independent financial advice before making
any financial decisions.’
Non-working women/
mothers/carers
Long-term career gaps for taking care of
family usually result in little or no pension
contributions and leave women at a huge
disadvantage.
Currently anyone can save up to £300 per
month gross (£240 net) towards a pension
plan up to age 75.
It is essential that a proportion of the
household budget is set aside towards a
pension for the non-earner.
Women married
or with partner
Never expect your husband or
partner’s pension to take care of
you in retirement. It all depends on
the provision request initiated by
your husband/partner or what the
scheme’s benefits/rules are.
On death of your spouse/partner,
the outcome is again subject to
scheme guidelines. The biggest risk
is for cohabiting women, as you
may have no rights at all to benefits,
whether they be from the employer
or the state.
Keep records
Never disregard preserved
pensions. Hopefully, before the
end of 2019, you will be able to
use a pension dashboard that
will help assist in the tracking of
these pensions, which could be
significant.
Preserved provision benefits from
inflation-linked growth, these pots
could therefore provide some much-
needed financial assistance for
those little extras in retirement.
Later life/ill-health
Due to longer life expectancy
for females and the increase in
health care costs, women need to
plan ahead financially. Insufficient
pension provision and lack of home
ownership (or other assets) will
result in having insufficient funds to
cover the cost of residential care for
women who outlive their partners.
This is one of the main reasons
that pension planning for women
is essential. The cost of long-term
care needs to be taken into account
when financially planning long term.
#TheClearAdvantage
activefinancialplanners.co.uk