Talking about pension advice, can make us sound like our parents. But as we’re all living longer, and most of us want to have the chance to retire and enjoy ourselves at some point.
It’s a really smart idea to think ahead to ensure that when the time does come, you’ll get enough money from your pension to live comfortably, and preferably with some cash left over to have fun.
From April 2016 onwards, a new State Pension is being introduced in the UK. There are also changes in the way that company pensions are administered.
Age UK has predicted that as many as 30% of working women will miss out on getting contributions from their employers because they don’t qualify for the auto-enrolment schemes designed to help them. This brief pension advice guide we’ll tell you just what you need to know.
Pension Advice for Women: What You Need Know
1) What Is The Auto-Enrolment Scheme?
By October 2018, every employer in the UK must legally provide an employee pension scheme. If you are over 22, working in the UK, and earn more than £10,000, you will be enrolled in the scheme automatically.
What is this means is that, a percentage of your pay will be automatically put into your pension pot, and your employer will make contributions too. This money will be kept until you retire: you won’t be able to access it until you are 55 at the earliest.
2) Is this A State Pension?
No. You will still get your State Pension (which, from April 2016, will be payable when you are 67), but that pension is worth very little: the maximum pension pay-out a pensioner can receive at the moment is £115.95 per week.
The auto-enrolment scheme is an additional pension scheme designed so that employees and their employers can top up what they will get from the government. The more money you save, the more you will have at retirement.
3) Why Are Women Likely To Be Affected By The Changes?
Firstly, many working women will not meet the £10,000 earnings threshold. In spite of equality legislation, women in the UK do still typically earn less than their male counterparts, and women are also more likely to work part time due to having increased caring responsibilities.
Women who are self-employed or who are taking time out from their careers to raise their children will not be auto-enrolled in the new pensions scheme.
4) What Can I Do To Make Sure I Don’t Miss Out?
If you are working for a single employer and earn more than £10,000 a year, don’t worry: the auto-enrolment scheme will cover you.
If you are earning less than this amount, or have taken time out from your career, here’s our top pension advice to help make sure you don’t miss out on the new pension scheme.
- If you are not auto-enrolled because you earn less than £10,000 a year, you can choose to enrol. Ask your employer about their scheme and how to sign up. You can agree your monthly contributions, and your employer will match them.
- If you have taken time out from your career, or have had a previous period of unemployment, there will be gaps in your pension contribution too. Many schemes will allow you to pay more than the minimum contribution level so that you can make-up historic gaps and make sure that you receive the full amount when you retire.
- If you are self-employed, you will need to take out your own, independent pension scheme as you won’t be covered by your employer. There are various different schemes available, and you can get information on them from the free and impartial Pensions Advisory Service.
Don’t risk being left short in retirement: do something to empower yourself today and plan ahead to make sure you can continue living the kind of life you want. Still not sure what to do? Check out Age UK.
What are you going to do to maximise your income in retirement and ensure you do not miss out? Do you have any pension advice for today’s women?