Attempts by both government and the industry to raise awareness about the importance of saving in a pension are still failing as around 60% of women do not contribute to a pension scheme, claims HSBC.
Research by the bank suggests six in 10 women are not contributing to a pension scheme, with 31% of these claiming it is because they are either not working or only working part-time.
In addition, the survey of 990 adults, carried out by GfK NOP, reveals 44% believe you have to be working to make a pension contribution, despite 66% admitting they are aware a husband or wife can pay into their partner’s pension scheme even if they are not working.
Ian Martin, head of pensions and retirement income at HSBC, says although people are now more aware of the need to save, which is proved by an increase in pension contributions, worryingly too many people still do not seem to be doing anything about it.
He warns: “Despite efforts by both the government and the industry to generate more awareness around retirement planning, our research clearly shows there is still a lack of clarity over how to go about it - especially among women and particularly stay-at-home mums.”
One of the aims of the government pension reforms, currently going through Parliament, is to improve the Basic State Pension (BSP) for women, by reducing the number of qualifying years needed to achieve a full BSP, and by developing a new system of pension credits for carers.
However, Martin points out the changes will mean a 27-year-old woman today will not be able to claim her state pension until she reaches the age of 68, and as a result he warns “women simply cannot afford to close their eyes and hope for the best”.
He adds: “By the time a 27 year-old women reaches the age where she can claim the BSP, she would be entitled to around £135 a week, but only if she has made National Insurance contributions for most of her life. She should be asking herself whether she can really live on £135 a week.”
However, HSBC says although saving earlier is best, if a 27-year-old women starts saving £50 a month in a stakeholder pension now, by the time she reaches 65 she will have a retirement fund worth £82,000, while saving £100 would achieve a retirement fund of £165,000.
Martin says: “We are seeing very positive attitudes towards retirement and we want to ensure people realise the sort of retirement they are hoping for. There are many options and planning tools available to kick-start a pension and no matter how small the contributions, the sooner people start to save for retirement the more likely they are to enjoy it when it arrives.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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