When you are planning your departure from work, pensions are probably quite far down on your “to-do” list of things to sort before you pack up your desk. 

However, it’s something that should be quite high on your list, especially for us women. Recent research by NOW: Pensions reveals that women have over £100,000 less saved than men by the time they reach retirement age. We call this the gender pensions gap. 

The biggest cause of the gender pensions gap is because women are likely to take time out of work to care for children and older generations. 

Whilst the availability of flexible working plays a key role in getting women to return to work more quickly after having children (the quicker women return to work, the smaller the pensions gap will be), there are a few things that women approaching their maternity leave can do to minimise the effects of their time away and ensure they are still securing a decent level of income for their future. 

What is a workplace pension? 

When you begin working, you will be automatically enrolled into your employer’s workplace pension scheme if you meet the eligibility criteria:

  • Aged 22 or over
  • Earn over £10,000 per annum.

However, women make up over 70% of part-time workers, which might mean that we don’t meet the £10,000 in order to be enrolled into a workplace pension. 

There are currently 3 million women in the UK who don’t meet the auto-enrolment eligibility criteria (if you earn under £10,000 or are aged under 22) and are effectively ‘locked out’ of workplace pension saving. 

Top tips to keep your pension savings on track when planning your maternity leave

Don’t opt-out

If you’re auto-enrolled into your employer’s workplace pension scheme, don’t opt-out. You can continue paying in your contributions whilst on maternity leave and still benefit from your employer’s contributions. Plus, you will also enjoy a tax top-up from the government on your contributions.

If you do opt-out of your workplace pension scheme you could be missing out on crucial contributions that your employer makes on your behalf – it’s like turning down a 3% pay rise. 

Do pay in the maximum that you can afford

Find out how much your employer pays into your pension and always pay the highest contribution that you can afford. Although currently auto-enrolment minimum contributions are set at 8% (3% of which must be from your employer), we recommend putting away around 9% of your salary to ensure you are saving for a decent level of income in retirement.

Don’t delay.

It’s never too late to start saving into a pension. The longer you contribute to a pension, the more money you will have saved and the more you’ll benefit from compound interest. 

Do make the most of your employer’s contributions.

Employers may meet your contributions up to a maximum percentage, so ask, and if they do then always pay in enough in order to maximise your employer’s contribution. After all, it is free money. Check with your employer if you’re not sure what they offer. 

Do opt-in! 

Lots of women go back to work on a part-time basis after having children, to help juggle work with childcare, which can put you into the ‘locked out-group’. But, you can still opt-in! By opting in, you are giving yourself the best chance of saving for a decent level of income in retirement. Again, ask your employer and they can help you sort this out. 

Do review your pension savings regularly.

Make sure you log into your pension scheme portal and check your pension pot regularly.  As you would your savings account, ensure you’re on track for the best possible lifestyle in the future. You should be able to review your pension savings in real-time. Reviewing your pension regularly should help make it more of a priority. 

Do put more money in as often as you can.

We all have immediate needs especially when starting or growing a family, however, if you are in surplus, no matter how small, do contribute more money to your pension.  For example, if you’ve had a pay rise or you’ve recently received a bonus, don’t forget to treat your pension pot too! The more you put in, the more opportunity your money has to grow and the more you will get out at the end.

Do track down your money.

People, on average, have 11 jobs throughout their lifetime. In each of these jobs, if you met the eligibility you should have been auto-enrolled into a workplace pensions scheme. That could mean that you have a lot of small pension pots accrued. As a consequence, the government estimates that there are 1.6 million unclaimed pension pots – equating to £19 billion! 

If you’ve had multiple jobs, it’s likely that you’ve got a few separate pension pots. Make sure you track them down and consolidate them where needed. You can find them with the Government’s Pension Tracing Service website. 

Pension saving can be difficult, especially for women. 

The gender pay gap and the gender pension gap are significant hurdles for women trying to save for their futures. 

It’s a perfect storm for us ladies; we have less money to put in, followed by intermittent working patterns and we need it to pay out longer as we typically live longer than men, an average of 4 years.

The sooner you start saving, the easier it is to build up a sufficient pot.

Be a tortoise, not a hare.

Pensions are a long-term savings vehicle, designed to give you a decent level of income for when you decide to stop working. 

To get the type of retirement that you deserve, it is important that you continue to monitor the health of your pension pot and seek advice if you ever feel stuck. 

You can find guidance through your employer, pension provider or by checking out the PLSA Retirement Living Standards guide.

Retirement can seem a long way away, but your future self really will thank you for starting to plan and save now.


About the Author:

Samantha Gould is responsible for the PR and Public Affairs at NOW: Pensions which is one of the leading workplace pension providers in the UK. A self-confessed pensions geek – Samantha has been leading the initiative on the Gender Pensions Gap campaign, working with industry peers to highlight the inequalities in the UK pensions system and lobby with the government to make a positive change.  

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