Martin Lewis discusses checking state pension underpayments
Pension savings are built up throughout a person’s working life but there can often be huge variation with this. How much a person saves for retirement can be affected by how much income they earn from employment and new data from the ONS highlights the troubling reality some people face with this.
The official gender pay gap estimates for all employee jobs in the United Kingdom show the difference (in mean) is now at 14.6 percent.
More2life, in response to these findings, laid out a summary of their own research on the UK gender pension gap:
- When life expectancy is taken into account, the basic gender pension gap could be as much as £108,130 for single women, this rises to £186,120 for women who are married or in a relationship, with men anticipating they will receive £8,460 more annually than their partners in retirement
- On average, men aged 54-64 expect to receive (or currently receive) a gross income of £5,964 higher than their female partner when they stop working. Single men also expect higher retirement incomes with those over the age of 55 receiving around £3,750 more a year than single women of the same age
- The majority of men (76 percent) and women (73 percent) over the age of 54 rely on their state pension to fund retirement, but men are more likely to depend on private sources of income. Nearly half (47 percent) of men say their income comes from a final salary or defined benefit workplace pension, compared to just over one in three (37 percent) women
- 42 percent of men aged 54 and over who are in a relationship said that their wealth exceeds that of their partner, compared to just 13 percent of women
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Dave Harris, the Chief Executive Officer at more2life, commented on these findings: “At a time when there has been significant disruption to many people’s retirement savings, we need collaboration from industry and Government to encourage people to engage with long-term financial planning.
“While our findings show that men and women are broadly consistent when it comes to state pension engagement, there is a clear disparity between the genders when it comes to utilising alternative retirement income sources.
“Nowadays, people approaching later life often need to fund a longer and more active retirement than their parents, but with smaller pensions.
“As such, it’s crucial for current and future retirees to consider how assets such as property could help them form a more holistic financial plan for their later years.
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“Equity release, for example, has proven to be a popular solution among older homeowners looking to make use of their property wealth to fund their retirement, and could enable more women to live with financial security and stability in later life.”
Additional research from EQ reiterates the need to increase pension awareness and engagement.
The pensions administrators suggested nearly half of the UK’s full-time workers don’t realise they’re contributing to an occupational pension scheme.
In analysing research conducted with over 2,000 adults, it was found just 48 percent of the UK’s full-time workers thought they were saving into a pension, despite ONS statistics proving nearly nine in 10 eligible employees are making contributions to one.
Duncan Watson, the CEO of EQ’s pension business, argues the results demonstrated a need for greater pension saver engagement, to cement the success of auto-enrolment in substantially increasing the number of those saving for later-life.
As Duncan explained: “Auto-enrolment has revolutionised pension saving for millions of Brits who are now participating in their workplace scheme due to the opt-out system now in place.
“It is evident, however, pension saving is still not on the radar of many people, even if they are actually making contributions to their retirement fund.”
Previous EQ analysis of ONS figures found preserved capital in defined contribution pensions has surged since the advent of auto-enrolment, indicating many employees could face trouble in the future tracking down various pension pots from different jobs or as a result of failing to update contact details.
Duncan went on to detail the creation of a pensions dashboard should help with this: “We are slowly tracking towards establishing a dashboard that will give employees the ability to see all their pots in one easy-to-use interface.
“This will be a substantial step-forward in saver engagement, but we urge all schemes to get ahead of the game and begin preparing their data for this major project.
“It will require a lot of work and for the sake of consumers, schemes should begin as soon as possible to avoid a last-minute dash to the finish line.”
Under the current Government schedule, a pensions dashboard should be up and running by 2023.
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