More women plan for retirement but millions miss out

New research from HSBC reveals that while more women than ever in the UK have pensions, confusion over eligibility means almost two million women are losing out on potential pension income.

In 2005 when HSBC started tracking consumer attitudes to pension planning, just over a third of women surveyed (37%) aged 18-60 were contributing to a pension. Three years on, HSBC's survey has revealed a marked increase in the number of women taking control of their retirement futures, with over half of women questioned (54%) now paying into a pension.

While HSBC's figures show that the number of women not planning for retirement has almost halved since 2005, coming in at under six million (32% compared to 62% in 2005), the extent to which women understand retirement planning has not improved at all the research shows.

Of these women without retirement provision:

Almost a third of female respondents (32%) admitted they were not contributing because they are not currently working or only work part-time. That's almost 2 million women failing to make pensions contributions because they believe they are ineligible (same figure as 2005)

28% of the women not planning for retirement said they believed they were too young to be prioritising pension provision (compared to only 7% in 2005)

Over a fifth (22%) of women without a pension revealed they couldn't afford to pay into a scheme (same figure as 2005)

Only 2% of women respondents said they were relying on a State Pension to fund their retirement (down from 8% in 2005)

Pension Miss-conceptions

Furthermore, of all the women questioned (with or without pensions) HSBC's research found that:

38% of women incorrectly believe that they have to be working to make pension contributions (41% in 2005)

Less than half of women questioned (46%) were aware that a husband or wife can contribute to their partner's pension, even if they are not working (even fewer than in 2005 when this figure stood at 53%)

Almost three-quarters of women (70%) were unaware that anyone could start paying into a pension scheme for someone else (compared to 68% in 2005)

Only one-fifth of women (19%) were aware that they needed to be in work for 39 years to qualify for a full state pension (NI contributions currently stand at 39 years for women, 44 years for men)

Ian Martin, Head of UK Retirement Businesses at HSBC, comments: "Our research is very encouraging, in that it shows women are increasingly taking control of their own retirement planning. 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.

"If women take time out from employment, either for child care, a sabbatical, or choosing to work part-time, they often stop paying into their pension scheme, or believe they can't start paying into a pension. This means they are unnecessarily restricting the amount they will be putting into their pension pots."

A 25 year old making £100 per month contributions to a stakeholder pension will achieve a £188,000 retirement fund; if they defer the pension contributions for 10 years they will achieve a £96,600 retirement fund, or nearly 50% less. If they defer the pension contributions for 20 years they will achieve a retirement fund of just £45,100, or about 75% less.

"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," adds Martin

HSBC's online Future Planning Tool 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 can visit hsbc.co.uk/1/2/personal/savings-investments/retirement-planning/pensions, or pop into a branch to discuss their needs with a financial adviser.