Women in their mid-50s have half the pension savings compared to men – here’s five tips to help you not fall behind
AJ Bell gives five steps to prevent flexible work and lower pay derailing your pension
1. Ask to be automatically enrolled into your workplace pension
If you’re making less than £10,000 a year with any one employer, you won’t be automatically enrolled into the pension scheme.
As well as those on lower salaries, it affects those working part-time.
However, if you earn between £6,240 and £10,000 with one employer you have the right to opt in and be treated like any other member of the scheme, so when you pay in you get employer contributions too.
Those who make less than £6,240 can ask to join a pension scheme through work, but won’t necessarily get employer contributions, so it’s important to check what’s on offer.
2. Try not to stop during maternity leave
If you go on maternity leave, it can be tempting to pause pension contributions, because money tends to be tight.
However, if you can keep up payments, you only have to pay a percentage of the actual maternity pay you’re getting, while your employer needs to keep making the same contributions as before.
3. Consider contributions as a couple
If one of you stops work for a period or moves into a part-time role, you will already be having conversations around how you will pay vital bills.
It’s worth adding your pension to the conversation and considering whether there’s a way to maintain payments.
If you’re not earning, your partner can pay in up to £2,880 a year and it will be topped up by the government to £3,600.
4. Pledge to increase contributions
If you can’t afford higher contributions today, pledge to pay more in when you get a pay rise or work longer hours.
One way to make sure this happens automatically is to work on the basis of paying in a certain percentage of salary – so it automatically rises when your income does.
However, it’s also worth revisiting your payments with each pay rise, to see whether there’s room in your budget to increase it.
Our research into the gender pension gap shows that men are more likely to pay in a higher percentage of their salary: 36 per cent of men are contributing 6 per cent to 11 per cent of their salary, compared to just 29 per cent of women.
5. Use one-off payments to boost your pension
Men are also more likely to use a one-off payment (like a bonus) to power their pension than women.
AJ Bell’s research showed 44 per cent would use one-off payments in this way, compared to 36 per cent of women.
It’s easy to mentally spend your bonus several times over, but if you’re due to get one, it’s worth considering pension payments among your options.
