Article for CareerAddict.com - about changes in UK pensions policy and whether women are heading for poverty in their old age.

1. When Should UK Women Kickstart a Retirement Plan?
August 2nd 2015 by Eileen OSullivan
10
0
163
(Editor’s Choice)
LIFESTYLE
SHARE IT!
shutterstock
You may think your retirement years are too far away to bother about, and though you might
not have to start planning your retirement party just yet, you may actually need to reconsider
your best options for future financial security. Here are compelling reasons why you should
plan for a secure future after work.

2. See Also: 10 Things Millennials Should Add to Their Retirement Bucket List Now
Financial planning in your twenties reaps rewards in later
life
From as young as 25, you really should consider putting away the pennies to make way for a
comfortable old age. The old saying ‘life is short’ ignores the fact that in real terms hopefully,
it will be long! If you want to receive your telegraph from the Queen on the day you reach
100, then you need to prepare now for a life of plenty, well into old age. When you’re young
and fancy-free, youth may seem immortal, anything is possible and who cares about an old
age pension when you are feeling on top of the world? Seems it's just not that simple, and we
have the experts to prove it.
I spoke to Paul Henthorn, Financial Planning Manager at Grant Thornton UK LLP (one of the
world's leading organisations of independent assurance, tax and advisory firms). He advised:
"Age UK has warned that 1 in 5 women in Britain are heading for poverty in their retirement.
Starting a pension at 25 and putting away £200 per month would only cost you £160 per
month after tax relief. If your pot grows at say 6% per year after charges, this would give you
a pot of around £393,000 at age 65."
So doing the maths, if you put off starting a pension till you're 40, then paying the same in
each year will give you a pot of around £139,000 - ie about 2/3rds less. By leaving it this late
you'd need to put in about £560 per month to end up with the same amount. This could mean
the difference in your retirement years between comfort and hardship. By saving now you
can plan to kick back in your comfy home, with the mortgage paid off and nothing to do but
enjoy your grandkids and your favourite pursuits.
Henthorn concludes: "This shows the benefit of long term growth and will ensure that with
early planning you can enjoy your retirement rather than worry about whether to put the fire
on or not!"
Women and retirement
Women are in a particularly vulnerable position, as they have often paid less into their work
pension schemes and have less National Insurance contributions stacked up due to 'time out'
having children or keeping house. If this sounds sexist, sadly it is backed up by the facts.
Women also make up the greater percentage of part-time and short term contract workers,
which gives them a weaker base from which to contribute to their NI pot. In this report Work
History and Income in Later Life conducted at Essex University in 2002, it was revealed that
women without a partner, especially those who were divorced, had a substantially higher risk
of low incomes in their old age than those who were married or cohabiting. Dr. Elena Bardasi,
co-author of the report, said:
“These results suggest that, for many women, having a partner with a good working history
still makes more difference to their income after retirement than their own working
histories."

3. As Paul Henthorn pointed out above, 1 in 5 women now face living in poverty in their old
age. So unless you are blessed with a live-in-lover (or even a husband) who is loaded, what to
do?
Are self-employed women heading for retirement poverty?
According to Conor D’Arcy, at the Resolution Foundation, in May 2015:
"Just one in five self-employed women currently has an active pension scheme. Without
further saving, many could be left to rely on little more than the state pension to support them
in their later years."
As self-employment becomes a longer-term career choice, the 4.5million Britons (and
counting) who work for themselves need to start thinking seriously about, and saving for,
their retirement. With the rise of WAHMs, or ‘work at home’ mums, this is even more
apparent than ever. Working at home provides a great opportunity for women with kids to
juggle the school run and to be around if a child is sick, or during school holidays. In an
economic climate where entrepreneurship is encouraged and more traditional job
opportunities for working mothers are less easy to find, self-employment is a real life choice
for many women. This does not include an automatic works pension contribution however, as
is the case with many more traditional jobs.
So if you are one of the four out of five self-employed women in the UK who do not have an
active pension scheme, or if you are currently planning your ideal career as your own boss,
you may need to think seriously about future financial security. Nowadays the pressure is
increasingly on for self-employed women to work out a pension plan that suits, and to act
accordingly.
Changes in retirement age
The state pension entitlement for women aged 60 was introduced in 1940 – three quarters of a
century ago. Sadly, the days are now gone when women could expect to retire at 60, five
years earlier than their male counterparts. All this is changing due to the current financial
climate, when the state needs to trim its outgoings and each individual is expected to take
more care of their own financial wellbeing throughout their lifetime.
With retirement age levels increasing by increments over the next decade, women will
eventually be retiring at 67 or even older, as will men. If you don't want to face a sudden drop
in income when you leave work, maybe you should act now. Here are some very useful
things you could consider:
 People are spending more and saving less due to the increased cost of living – this
puts a strain on the economy, and thus depletes the money available for state pensions
in the future
 By expecting the state to provide for you or top up your pension plan in later life, you
are gambling with politics and with the future state of the economy
 Healthcare costs and the cost of long term residential care are rising
 By choosing the best pension plan now with a decent interest rate you could help
offset the relative decrease in your savings due to ongoing inflation

4.  You may be loved up and in a relationship now, but live-in relationships end. Do not
make the mistake of relying on a man for your future financial security
See Also: Top 4 Items For Your Retirement Checklist
This isn’t just boring old sums and wishing your life away. All of these measures could mean
the difference between going without necessary heating and basic essentials, and enjoying the
latter years of your life - secure in the knowledge you have provided a good standard of
living for yourself and your family. So to answer our question:
Women should start saving for their retirement plan as soon as they are prepared to put away
the pennies.
In the example given by Paul Henthorn above, this would be at around 25 years old, but
better late than never. Start a retirement plan now and reap benefits in later years.
THANK YOU FOR VOTING!
Have you planned for your retirement pot?
No - I don't have a pot to p*** in
34%
No - I'm too young to think of being old and poor
33%
Yes - A little now will mean a lot later on
33%
No - Who wants to think about money anyway?
0%
Total Votes 3