Don't let 'motherhood penalty' harm your pension

The Equality Commission said over a third of women (36 per cent) feel that starting a family had a negative impact on their finances, and may even have affected their career opportunities

Are you thinking of taking a day or two off work this month, perhaps to get some early Christmas shopping done?

If you are a woman, it could be that you don't need to, because you have been on holiday for the last week. You didn't know?

The latest figures from the National Statistics Office show us that women's salaries are still, on average, 14 per cent lower than their male colleagues. This means that in real terms, you finished work for the year on November 10th.

Think of that! If you boiled the office kettle for a cup of tea after that date, you were using their electricity while you weren't ‘on the payroll'. Shame on you!

This is a new angle on a traditional problem.

We know that women tend to have lower pension provision, in both the state and workplace pensions, than their male colleagues.

This is partly due to the traditional situation where a new mum takes a career break to care for her young family, in fact the Equality Commission said lately that over a third of women (36 per cent) feel that starting a family had a negative impact on their finances, and may even have affected their career opportunities.

In fact, many women feel they have been subject to unfair treatment, and been discriminated against in the workplace, because they took a career break or simply took maternity leave. The Commission reported many cases of unfair treatment which had a financial impact, including unwanted role change, loss of bonuses, being overlooked for promotion, or even being made redundant.

There's even a zippy term for this phenomenon in the pensions industry: it is known as ‘the motherhood penalty'.

In their latest report on women and retirement, Scottish Widows told us that nearly half (47 per cent) of women in their 20s who are not working do so because they are full-time mums, and the figure is even higher for women in their 30s.

And because we are now starting a family later – the average age is now 29, higher than ever before – women have less time to ‘catch up' on their pension saving when they do eventually return to the workplace.

In general, new research by Scottish Widows shows that average pension contributions across the UK are £184 a month, including employer contributions which, they calculate, will give workers an annual retirement income of £15,200 including the state pension.

Those, however, are average figures, and the bad news is that here in Northern Ireland we are probably saving less. In fact, we are bottom of the table in the UK for pension saving – less than half of us (46 per cent) are making adequate provision for our later years.

This is despite the introduction of auto-enrolment, whereby all eligible workers are entered into a workplace pension scheme, which has resulted in 80 per cent of 22 to 29 year olds now saving for their retirement. Despite this, 70% of people, men and women, are still not putting away enough according to Scottish Widows.

Inadequate saving is another word for inadequate planning, and while it is more difficult for women, it is a widespread problem for everyone. Most women who talked to Scottish Widows said they would like to be retired by 62, but at the very latest by 67 – however, 18 per cent said they do not ever expect to be able to afford to retire.

A half hour with a qualified financial adviser to look at your pension saving will give you the facts you need to see if you need to be saving more, right now.

Finding the time shouldn't be a problem – especially if you're ‘on holiday' for the rest of the year!

::Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005 . Further information on Facebook at “Kennedy Independent Financial Advice Ltd”.

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