Sorry, old girl
Pensions are one of the last bastions of sexual inequality. Without careful planning, women can find themselves with very meagre pickings in retirement. By Nic Cicutti
Wednesday 12 February 1997
Yet, as millions of women will discover, they are likely to face a drastic drop in their living standards when they finally stop work.
A recent survey by Flemings, an investment company, found that 53 per cent of women - some 10 million - will be affected in this way, compared with 40 per cent of men. There are several reasons for this, linked in part to expectations placed on women by society. For example, enforced career breaks by women, usually caused by caring for children or elderly relatives, mean that they are less likely to be able to build up uninterrupted periods of service with employers, ensuring bigger pensions. Their longevity relative to males ensures that if women start personal pensions, they will receive a smaller income.
One bizarre side-effect of equality legislation brought in by the Government in the past few years has been to worsen the position for women. After several European Court judgments in cases brought by women who demanded equal pension rights, the Government equalised retirement ages - by raising that of women to 65. Women under 40 at present will have to wait until 65 for their pension.
It is still possible to do something about your pension. The first step is to obtain an immediate forecast of what pension you will be entitled to by the state. This takes into account the National Insurance contributions you have paid to date.
Fill in form B19, obtainable from your nearest Benefits Office. Complete the form and send it in to the Retirement Benefits Forecasting Unit, Contributions Agency, DSS, Newcastle-upon-Tyne, NE98 1YX.
If you have spent part of your working life at home, check whether the forecast includes Home Responsibilities Protection or Invalid Care Allowance, which both count towards the missing years when you have not been paying National Insurance contributions. Once you know how much you will receive from the state, plan how to make up the difference in terms of how much money you will need at retirement. This means that if you are in work, where possible you should join the company pension scheme, even if you are a part-timer. Ask the personnel officer or a union official for details.
In addition to the basic state pension, there is an additional State Earnings Related Pension scheme, or Serps. This is partly linked to your earnings. In the past 15 years, the Government has acted to cut the amount paid through Serps, while at the same time offering financial inducements to opt out of the scheme.
For those who have high earnings and are in work for long periods, it may make sense to opt out of Serps. The inducements are based on a percentage of what you earn. They are paid into a personal pension scheme and invested. This may allow you to benefit from higher investment returns so that you end up with more money when you retire.
But if, like many women, your salary is low - beware. Opting out of Serps means you might only have a small percentage paid into your rebate-only pension, while taking a career break could leave you vulnerable to flat- rate charges. You could end up with less at the end than you paid in. Talk to an independent financial adviser about whether you should be opting out of Serps. Call 0117 971 1177 for details of an IFA near you.
If you are choosing a personal pension, always look for a pension that is highly flexible. You need something that will not penalise you for stopping contributions and starting them again and which can cope with temporary reductions in premiums. Charges should be spread across the lifetime of a product, not levied up-front.
Again, talk to an independent adviser. Companies with cheap and flexible pension products include Eagle Star, Equitable Life and Virgin.
If you are getting divorced and your husband is a member of a pension scheme, tell your solicitor. You may be entitled to a share of your husband's pension - though he may be entitled to a slice of yours.
Finally, if you are not working but still want to set up a nest egg, don't despair because the law says you can't set up a pension. There are other tax options including Personal Equity Plans, or Tessas, available through most banks and building societies. Once more, talk to an adviser.
Most important of all, don't leave it until too late to prepare for your retirement. Relying on men is never a good idea at the best of times. It becomes even less so when it comes to ensuring a good time when you stop work Nic Cicutti, personal finance editor of The Independent, has written a Guide to Pensions Planning. The 52-page guide, sponsored by Equitable Life, a leading life insurer and pension provider, is available free by calling 0800 137372, or fill in the coupon below
27 February 2015 07:30 PM
27 February 2015 07:30 PM
27 February 2015 12:01 AM
The NHS is currently bearing a yearly burden of approximately £1.5bn treating cold-related illnesses every winter
26 February 2015 04:17 PM
Hundreds of thousands of people's policies were hit when the mutual insurer almost collapsed at the turn of the century
27 February 2015 12:01 AM
The Department for Work and Pensions has been slammed after a series of cock-ups left an elderly pensioner £26,000 worse off.
24 February 2015 08:57 AM
A 20-month investigation concluded that a lack of price competition between lenders has led to higher costs for borrowers
23 February 2015 04:02 PM
The Financial Conduct Authority said the industry needs to start thinking about solutions to these challenges
20 February 2015 08:00 PM
In 1999 stock markets quickly tumbled, losing many a fortune in the process
20 February 2015 08:00 PM
13 February 2015 08:00 PM
13 February 2015 08:00 PM
06 February 2015 09:00 PM
Customers paying up to £250 more on energy bills than they should every year
10 tips for taking out a personal loan
Has your Premium Bond won the £1million jackpot?
There are 'dark corners' of the investment and pensions industry, says Pension Minister
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 What happens to your body when you give up sugar?
- 2 Ed Miliband deemed less influential than One Direction's Louis Tomlinson by official Doncaster power list
- 3 Japanese island overrun with cats after population explodes
- 4 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Ukip would cut billions from Scottish budget to fund English tax cuts
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...
£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads