HAVING enough to live on in retirement is an issue not only for women but for men too. No-one wants to be cash-strapped when they’re older and may neither wish nor be physically able to work and earn an income.
After a lifetime of hard work it would be nice and feels only right that you could put your feet up, relax and enjoy life without penny pinching and watching the electricity metre!
When you ask people their opinion on pensions, many will say they’re a good idea, they’d like one but can’t afford it, don’t know how to start one, find it all a bit complicated which likely results in non action and the worryingly low pension take up rate in this country. This is borne out by our research.
In our most recent survey Overall, 54% of men own a pension compared with just 39% of women. If you exclude the public sector (where most employees tend to be automatically enrolled in high quality pension schemes) private sector pension ownership is far worse. The research shows just 44% of men vs 29% of women own a pension.
Most people have high expectations of their retirement — women included. Financial adviser Norma O’Neill Collins, Fealeside Financial Services in Listowel who has many female clients says women fully expect to have their holidays as before, go out for dinner, run a car, have a girls night out but they genuinely don’t realise how much they need to save to do that. She says they really don’t understand how pensions work — at all in some cases.
“I find once it’s explained simply, they get it, they’re bought in and delighted about the tax relief on their savings. I had two female clients in their 40s who didn’t realise they could save a higher percentage of their salary tax efficiently into their pension as they got older — they were thrilled when they found out but to me it’s just terrible they didn’t know sooner,” she said.
This example is corroborated by Standard Life’s research over the past decade into women’s pensions:
Vast majority of women don’t know how to start a pension (71%). There are two main ways – if you are an employee through your employer’s scheme. Ask HR or the accountant if it’s a smaller company. All companies irrespective of size must offer you access to a pension even if they as an employer don’t contribute to it.
Bigger companies typically offer to pay a percentage of your annual salary into your pension — seize it with both hands even if it means matching the contribution. It will be worth thousands if not tens of thousands and possibly more over a few decades.
If you’re self-employed you can purchase a pension via an adviser as most people benefit from good advice in a complicated area. You can of course buy it directly from a pension provider but there will be no advice involved.
Over 2/3 of women don’t realise pensions are (very) tax efficient (69%). This is the key attraction of pensions and once you understand that investing €100 in a pension costs you €60 as a higher rate taxpayer or €80 as a standard rate taxpayer, you will want to own a pension if you don’t already have one.
Over ¾ of women who don’t have a pension are worried about not owning one (76%).
It does give peace of mind knowing you’re making progress on looking forward to a fun and comfortable retirement. You can enjoy watching your pension pot growing bigger over time online.
70% of women don’t discuss pensions on a night out. Unsurprising but perhaps therein lies the problem. It helps explain the low retirement knowledge and pension ownership levels. Women informing women is a great way to learn.
79% of women don’t save additional voluntary contributions (AVCs) into their pensions aka ‘rocket fuel’ for pensions.
If you’re behind on your pensions saving these are simply extra contributions that you make to your pension pot in addition to your employer’s contributions.
If you’ve read and understood to this point, you are now in the elite 20 odd per cent of women who understand pension basics. Google the subject, speak to a trusted family member or friend. If you’re an employee find the HR person or accountant in charge of administering the scheme and sign up. If you’re self-employed, speak to a trusted financial adviser.
With some good advice, this will be one of the best decisions you will ever make — carpe diem!