42% of UK women unaware of how much is in their pension pot, research reveals

Rebecca Tomes
29 June 2021
(IFA Magazine)

 

Fidelity International’s Global Women and Money study finds 42% of UK women do not know how much they have saved for retirement, compared to 25% of men.

 

Without greater engagement with their retirement planning, women face a further widening of an already glaring pension gap, warns Fidelity International.

New research reveals two-fifths (42%) of women in the UK don’t know how much they have saved for retirement, compared with a quarter (25%) of men1. This figure rises slightly among those closest to retirement, with 44% of women aged 55 and over unaware of how much is in their pension pot. Almost a quarter (24%) are unsure how much they’re saving towards their pension each month compared to 13% of men, while another 13% of women are not making any regular contributions at all compared to 10% of men.

 

Maike Currie, Investment Director at Fidelity International, comments:

“Women already face a myriad of saving challenges from the so-called ‘motherhood penalty’2, to the ‘good daughter penalty’3 and of course the gender pay gap4. While these factors are challenging, often they’re beyond our control. What we can control, however, is how much we are putting into our pensions.

 “There are still too many women who don’t know how much they’re contributing to their pension, how much is in that pension pot, and crucially whether it will be enough to fund the retirement they choose. Industry, Government and women themselves need to step up to ensure women are informed and equipped with the right tools, guidance and advice to prepare for retirement and ensure financial independence.”

Fidelity’s research also reveals that nearly half of women (49%) don’t think they’ll have enough in their pension to fund the lifestyle they’d like in retirement. For many, its pressure on their current finances which holds them back from saving more, with 46% of women saying they don’t put more into a pension because they don’t have the available funds and 21% saying that other savings priorities take precedence. Perhaps most concerning, 17% are unsure how best to save for the future.

The findings are published as Fidelity International launches its Global Women and Money study, a report on the finances of women in six markets around the world – the UK, Germany, Hong Kong SAR, Taiwan, Japan and China.

Global comparisons of retirement preparedness:

 

% of women who don’t know how much they have saved for retirement % of women who are worried they won’t have enough in their pension pot to fund their retirement
UK 42% 49%
Japan 58% 53%
Germany 44% 48%
Taiwan 24% 37%
Hong Kong 9% 40%
China 13% 8%

 

Maike Currie continues:

“Our research shows that many of the barriers women face when it comes to retirement planning, as well as worries about having enough money in retirement, are common across the world. This is a challenge that extends beyond the UK and highlights just how important it is to support women to plan for the future.”

 

Currie’s steps for taking control of your pension: 

  1. Maximise your workplace pension contributions – “In the UK, auto-enrolment means that those who are part of a workplace pension scheme will not only make contributions towards their pension themselves, but benefit from employer contributions as well, with all qualifying employers having to contribute a minimum of 3%. Some employers will offer to contribute more if you do – check to see if these ‘extra’ contributions are available and if they are, think about taking advantage of them.
  2. Understand where your pension is invested – “When you joined your company’s pension plan, your contributions were most probably invested into a ‘default investment’ or ‘lifestyle strategy’. While this option is broadly suitable for most people, you may want to adopt a different approach to investing. Explore what other investment options you have available and compare the costs of these – there may be investment solutions better suited to your retirement goals.
  3. Check your retirement age – “Workplace pension plans offer a default retirement age – it’s worth checking what yours is and thinking about whether you might want to extend it. If you are planning to work for longer, make sure you change your retirement age on your pension to reflect this so that your default fund doesn’t begin de-risking sooner than you need it to. If you are approaching retirement you may also want to research Investment Pathways – a recent initiative created to ensure that anyone entering pension drawdown without taking financial advice has access to investment strategies that meet a range of different retirement objectives.
  4. Don’t have a workplace pension? Research SIPPs – “Self-Invested Personal Pensions, also known as SIPPs for short, are a great pension product for those who don’t have workplace pensions, or are not eligible for auto-enrolment, to save towards retirement. Even if you’re not working, or are taking a career break, you or someone else can still contribute into a SIPP (up to £2,880 a year).
  5. Track down lost or forgotten pension savings – “Given that very few of us these days will work for the same company throughout our working lives, there’s a good chance you have a few pension pots dotted around. Over time, it can be difficult to track these down. Likewise, often when people move to a new house the data held by past pension schemes can become out of date. This is where the Pension Tracing Service can help. It has the details of over 200,000 pension schemes and can help people track down previous pensions – with the added bonus that it’s completely free of charge. Remember though that there’s no tracing service for private pensions as these aren’t on the Pension Tracing Service database. You must contact your scheme provider to find out what your pension is worth. If you don’t know where to start, a good option will be the Unclaimed Asset Register.”
  6. Having children? Make sure you claim child benefit – “This is a little known and often misunderstood topic. When it comes to your state pension, you will only receive the full amount if you have been making National Insurance contributions for 35 years – which means women who take time out of their careers to have children could risk lowering the amount they receive in state pension when they retire. To solve this, make sure you claim child benefit as you’ll get National Insurance credits when you do, and you can claim until your child is 12. For those who are not entitled to child benefit due to their partner’s earnings, it can be claimed, but not received.”
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