Pension confusion reigning supreme among women

With the UK’s ‘pension crisis’ regularly making headlines, people are becoming more aware of their need to save for their retirement.

However, research from HSBC has found that there is still an amazing amount of confusion when it comes to putting an adequate retirement plan in place - especially among women.

HSBC’s latest research found that:

six in 10 women still say they are not contributing to a pension scheme; of these

almost a third (31 per cent) say it’s because they are not working or only work part-time;

44 per cent believe that they have to be working to make pension contributions;

only 36 per cent were aware that anyone can contribute to a pension for anyone else; even though

two-thirds (66 per cent) acknowledge that 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, comments: “Although people are now more aware of the need to save, verified by an increase in pension contributions, worryingly too many people still do not seem to be doing anything about it.

“Despite efforts by both the government and the industry to generate more awareness around retirement planning, our research clearly shows that that there is still a lack of clarity over how to go about it - especially among women and particularly stay-at-home mums.”

The government, through its pension White Paper, is currently in discussion with the industry to pull together reforms that should help secure a better retirement for everybody.

Their aim is to set out a state pension that will be more beneficial in the long-term, with the quid pro quo being that people will have to wait longer before they will be able to collect their pension.

The age at which somebody will be eligible to collect their pension will increase in tiers and as a result, a woman aged 27 today will not be able to claim state pension until she reaches the age of 68.

Mr Martin continues: “Even with the positive steps the reforms bring, women simply cannot afford to close their eyes and hope for the best. By the time a 27 year-old women reaches the age at which she can claim basic state pension, 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.”

In an ideal world, saving for your retirement should begin sooner rather than later. Unfortunately it can seem less of priority compared to other factors, such as buying a first home or starting a family, but even a contribution of just £50 a month can make a difference, for example:

A woman aged 27 making £50 per month contributions to a stakeholder pension will achieve a £82,000 retirement fund by the time she is 65;

The same women contributing £100 per month would achieve a retirement fund of £165,000.

Mr Martin concludes: “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 your pension and no matter how small the contributions, the sooner you start to save for your retirement the more likely you are to enjoy it when it arrives.”

HSBC’s online Pensions Calculator can help with retirement planning by estimating how much you may need to pay into a pension plan to receive your desired retirement income, and show you how well you’re doing so far.

People looking for further information on the pension options available, how to buy and manage pensions online, and where to seek advice can visit hsbc.co.uk/1/2/personal/savings-investments/retirement-planning/pensions, or pop into the branch to discuss their needs with a financial adviser.

HSBC offers a simple stakeholder pension that can be opened online with no initial fees and annual charges that are capped at one per cent. The fund range available includes cash, a FTSE all-share tracker, a European equity tracker, UK or global equities and HSBC’s Amanah Pension fund, which is designed to meet the requirements of Shariah (Islamic law).

For those who desire a greater investment choice and a more bespoke solution, HSBC also offers Self Invested Personal Pensions (SIPPs).