The latest figures from the Office for National Statistics suggest that, on average, women earn around 16% less than men. This, of course, affects pension contributions and ultimately leaves women generally reaching retirement with substantially smaller pensions.

Women are also more likely to take part-time positions or become self-employed to create time for managing family-focussed commitments, which again has an impact on pensions.

L&G (Legal and General) has shown in their research that the average L&G pension pot for a woman at the time of retirement is less than half of the corresponding average for their male clients. According to data from over 4 million members of L&G pension schemes, the average pension gap at the beginning of a woman’s career is 17%. The data also demonstrates that this gap widens over time, with the gap at time of retirement being closer to 56%.

What can you do to take control of your retirement?

While there are structural factors at play which will not be solved overnight, there are some considerations that could make an impact on your pension pot that you can put into action in the short term.

Check your NIC records

In order to qualify for a full state pension you will need to have 35 years’ worth of qualifying NICs (National Insurance Contributions). You will usually need at least 10 years’ worth of NICs to receive any state pension at all. NICs can be earnings-related contributions, but they can also be national insurance credits or voluntary contributions. National insurance credits may be from times when you have been a parent, carer, ill or unemployed. The full state pension currently stands at £179.60 per week, which can make a considerable difference during your retirement years.

If you are unsure about your NIC record, you can check it on the government website at GOV.UK/check-national-insurance-record . This will show you what’s been paid already up until the start of the current tax year, as well as any national insurance credits that you’ve received. It also shows you any gaps without contributions or credits and whether you can make voluntary contributions to fill those gaps.

Pay into a pension during maternity leave

Some people may not be aware that if you stop paying into your pension whilst on maternity leave, employers can also stop their contributions. Of course this is reliant on whether you can afford to continue making contributions at that time, but the continued contributions from your employer can make a big difference in the long run.

Save into a pension even if you’re not working

If you find yourself not gainfully employed, but with access to funds from another source, you can continue to save into a pension. These funds could come from savings accounts, or your partner may be able to pay into the pension on your behalf.

Currently, for the 2021-22 tax year, you can save up to £2,880 into a pension per annum whilst not working. Additionally, the government will provide a boost to that figure of £720 via tax relief, putting a total of £3,600 into your pension throughout a year of unemployment.

Top up your pension when possible

If you are intending to take a planned break from your career, for any reason, it may be worth considering increasing your pension contributions prior to the break taking place. This can help to mitigate the loss of employer contributions during that period of time. Some employers may even be happy to match increased contributions.

Seek personalised advice

The steps above will not apply to everyone, and you should seek professional advice before acting. Nothing beats personalised advice tailored specifically to your needs and situation.

At Questa Chartered, we have vast experience in helping individuals and families make provision for their future. We will continue to update you with important developments, and if you have any questions in the meantime, please don’t hesitate to get in touch.