Women miss out on pensions despite more planning for retirement

07 May 2008 / by Rachael Stiles
More British women than ever are planning for their retirement, but many are losing potential pension income because of confusion over eligibility.

According to research from HSBC, the number of women not putting anything into their retirement pot has halved during the last three years, but almost two million women are still potentially missing out on making pension contributions because there has not been the same increase in understanding among women about pensions.

In 2005, HSBC found that little more than a third of women in the UK aged 18 to 60 were contributing to a pension, compared with 2008 when it has found that more than half contribute, but education needs to be improved if women are to get the maximum benefit from this increase.

Of the two million not making any contribution to pensions in preparation for retirement, almost a third said that they were not doing so because they were not currently working or were working part time – they are therefore missing out because they believe themselves to be ineligible.

A further 28 per cent said that they were not contributing because they believe they are too young for pension provision to be a main priority; 22 per cent said that they could not afford to pay into a pension scheme, and just two per cent admitted to being reliant on a state pension to fund their retirement – a decrease from eight per cent in 2005.

Of all the women asked, those with and without pensions, 38 per cent incorrectly believed that they have to be working in order to contribute, more than half were unaware that a spouse can contribute to their partner's pension even if they are not working and just a quarter were aware that anyone can pay into someone else's pension scheme.

Just one fifth of women were aware that they need to be in work and paying National Insurance contributions for at least 39 years in order to qualify for a full state pension when they retire.

"Our research is very encouraging, in that it shows women are increasingly taking control of their own retirement planning," said Ian Martin, head of UK retirement businesses at HSBC. "Yet many women are potentially missing out as they are still confused about when they can pay into pensions and who can pay into pensions."

"We want to ensure that women are realising the sort of retirement income they are hoping for. Factor in that women will generally be retiring around the age of 65 and living on average until they are 88 years old, that's 23 years of retirement to fund. So it's important to get the message across that you don't have to be earning yourself, or working full-time to keep a pension scheme going. You can contribute to a scheme even if you are not working, or your partner, or someone else, can keep up the contributions for you."

© Fair Investment Company Ltd