Mind the gap. How can women maximise their pensions?

The main reason for the pension gap is that women tend to earn less than men, they are more likely to work part-time and to take career breaks for children and caring responsibilities. In addition, women tend to live longer so have more years to fund in retirement.

So what can be done to make sure that women are not missing out and can enjoy a comfortable retirement? Here are some things to consider:

1. Check your State Pension forecast

See how much your State Pension is worth at www.gov.uk/check-state-pension. You may have gaps in your National Insurance record which will affect your pension but these can be voluntarily topped up. State benefits such as child benefit include NI credits and you receive these credits whether or not you receive the child benefit itself.

2. Increase your pension contributions

If you are enrolled in a workplace pension, you can pay more than the required amount and your employer may match or even pay more than your extra payment. Consider your monthly income and whether you could add a small amount more to your personal pension plan. The more you save for your retirement now, the better off you’ll be.

3. Maximise your tax relief

Earning tax relief on your pension is a no-brainer – a portion of the money you would have paid in tax on your earnings goes into your pension pot instead. This can also be claimed through self-assessment for self-employed people.

4. Take advantage of joint allowances

If you’re married, in a civil partnership or a relationship with shared assets, it might be advantageous to save together for your pension. You or your partner can also pay up to £3,600 gross per year into your pension, even if you don’t work, creating a tax top-up of £720 on a net cost of £2,880; an immediate 25% return!

5. Consolidate your pensions

It isn’t always beneficial to bring all your pensions together from your previous jobs but if you’re struggling to keep a track of all the different pensions you have, with the right advice, this could be a good move. There is also a government tracing service to help you track down pensions from a former employer. Always beware of moving away from defined benefit arrangements though where your pension amounts are guaranteed, though these schemes are now an almost exclusively public sector reserve.

6. Adjust your plans

If you assess that your pension pot will not provide you with a comfortable retirement, you could consider delaying when you finish work. You could reduce your hours and continue to pay into your workplace pension. Your pension provider may also suggest you change where your pension is invested at this stage.

With many people expecting to struggle financially when they stop working, retirement planning and maximising your pension pot is essential for women to be financially independent and have sufficient funds to support their lifestyle.

Always seek independent advice before you make any changes to your pension situation. The financial experts at CRM are always happy to talk through issues and recommend pensions advisors. Please note that we are not able to give investment advice, and the subjects raised here are generic and for general guidance only. Call the friendly team on 01865 379272.