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PERSONAL FINANCE: How women can combat their pension disadvantages

Although four out of 10 marriages in the UK end in divorce, only 15 per cent of couples include their pension as a joint asset to be shared
Although four out of 10 marriages in the UK end in divorce, only 15 per cent of couples include their pension as a joint asset to be shared Although four out of 10 marriages in the UK end in divorce, only 15 per cent of couples include their pension as a joint asset to be shared

RECENTLY we discussed how difficult it is for women to achieve a level of pension savings that will allow them to be comfortable and, if necessary, independent in their retirement.

This week we’d like to look at the human side of that challenge, the actual family realities that give rise to the pension figures. (Statistics junkies, do not despair, we’ll have some cracker numbers for you later on.)

Did you know that your pensions can be classified as joint assets to be shared, in the event of a break-up? Suppose you are married, and you and your husband decide to join the ranks of the ‘Silver Splitters’, couples who divorce in their later years.

Well, it seems that women rarely take advantage of this to secure their own financial future. A feature last year by Which? magazine said that, although four out of 10 marriages in the UK end in divorce, only 15 per cent of couples include their pension as a joint asset to be shared.

Recently we have also touched on the ‘motherhood penalty’, that period of up to 10 years when new mums take a career break to raise their toddlers. The hidden side of this is that women no longer at work are putting their workplace pension on hold. If they ever go back at all, many opt for part-time work, further limiting their pension saving.

Furthermore, if they don’t achieve their full 35 years of national insurance contributions, they also risk missing out on the full state pension (although you will get some state pension if you have at least 10 years of contributions).

Now here’s the thing: given that the average age for men to become new dads is 31, then it’s during the following decade, when their wives or partners are full-time mums, that men are promoted into positions where age is seen as a benefit.

For women wishing to return to work, however, the 10 years they spent at home and out of the workplace is often seen, quite wrongly, as a hindrance.

That’s why industry experts have repeatedly said that women need advice and financial education in their early and mid-career, to make a plan to combat these disadvantages.

Now. Stats junkies, the wait is over. Here’s this week’s numbers fix.

For International Women’s Day on March 8, HMRC published some pretty alarming statistics about salary levels for men and women throughout their careers. Just look at how the wage gap increases as we go.

In the 2020/21 tax year, men’s average wage was £28,700, women’s was only £23,600.

The wage gap grows with age. Among young workers up to the age of 20, men earn 3 per cent more than women. By our early 30s, men are earning 13 per cent more, rising to 21 per cent more in our late 30s, 26 per cent in our early 40s, and 32 per cent more in our late 40s.

To put it another way, for those earning over £20,000, there are more men than women in every tax bracket. The only place where women outnumber men is at the lowest levels of income.

As a woman, do you want to be a low wage statistic, or would you rather speak to a financial adviser now, and make a sensible plan to maximise your pension savings and your security in retirement? We’re the pension experts - and we’re just a phone call away!

:: 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 or at www.mkennedyfinancial.com