Women working past retirement

Journalist: Samantha Downes, Currently at the i (freelance)

ended 10. May 2022

Some research from Workingwise.co.uk has found half of older women fear they will have to keep working beyond the state pension age in order to make ends meet. As many as 53% of women aged 45 and over surveyed by the older worker advice website are concerned that their pension would not be enough for them to be financially independent in later life.

The study, carried out to investigate women’s economic situation as they approach retirement, exposes the lasting impact that career breaks – such as time off to bring up young children or to care for relatives – or working part-time can have on women’s pensions.

Is this adviser experience, and I'm also looking for case studies if possible?

6 responses from the Newspage community

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Tahina Akther
Barrister and Co-Founder at Wildcat Law
"As a matrimonial finance Barrister who specialises in pensions for women in divorce, I come across this a lot. Divorce can be a significant reason for some finding this. "Firstly, many couples manage their finances jointly, and historically women were more likely to be the home maker, giving up their careers and pensions. This was often done on the understanding that the husband's pension would fund joint retirement. Of course, if the relationship failed then the husband was left in possession of the pension. Many financial settlements would concentrate on the former wife's immediate financial needs with the pension value being partially "offset" against current assets usually at a large discount. Pensions accrued before and after the relationship would also often be excluded from the split. This resulted in women being left needing to accrue pension savings far later in life. More recently, pensions have a spotlight on them in financial settlements conducted by lawyers, but many settlements do not involve lawyers and are therefore reliant on the awareness of the former wife regarding the value of the former husbands pension(s). "When it comes to non-married couples, this situation is often even more devastating to the woman's finances. Again they often act as home maker, believing that they will jointly benefit from "shared" retirement arrangements. Until the relationship breaks down. Unfortunately, there is still a misconception that co-habitation brings the same rights as marriage, but unfortunately it does not. Whilst there are actions to be taken regarding property, typically the former female partner will be left with no access to their former partner's pension provision. "I also see regularly with my cases, women who have taken career breaks and then return to work and lose access to defined benefit pension schemes. If they are 45+, the chances are they took a career break from a job that had a final salary pension. However when they returned to work most of these schemes were closed to new members and hence they would only be able to join the defined contribution pension. The DB schemes were typically far more generous than DC and would require significantly higher levels of contributions to guarantee the same level of benefits. So even if a women had re-joined at the same level as their male colleagues, the overall benefit package would not be equivalent."
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Scott Gallacher
Director at Rowley Turton
"This research doesn't surprise me at all. The UK has a significant gender pension gap due to women typically shouldering the responsibility for caring for both children and elderly relatives. That caring responsibility not only has an immediate impact on their earnings but also potentially a life-long impact on their career progression, and their pension provision. It is important to bear in mind that for some people the gender pension gap may be due to legitimate tax planning reasons. For example, for a couple with a part-time or lower-paid wife, and a full-time higher-earning husband, it is often much more tax-efficient to pay into the husband's pension, rather than the wife's, to benefit from higher rate tax relief. However, even in the above situation, there can still be issues, especially if the couple were to divorce in the future. This is because, on divorce, women often prioritise retaining the family home over other assets, such as pensions. Consequently, on divorce, many women end up with much lower pensions than their ex-husbands."
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Joshua Gerstler
Chartered Financial Planner / Owner at The Orchard Practice
"With the majority of couples we look after who are approaching or at retirement, it is usually the woman who has a smaller pension than the man. This is not usually an issue for those couples who are happily sharing their finances. For singletons or those who want to keep their finances separate, it can become a problem. Often, if someone has had time off work for childcare (and historically this was mainly women) their pensions did not continue during this period. As society evolves, and with more shared parental leave, with not just women taking time off to raise children, we will see this becoming more of a problem for all parents. It is not a male versus female issue we need to resolve, but a financial planning issue. If those who are taking career breaks (for whatever reason, as some now do so simply to enjoy themselves) have a proper financial plan in place, then they will be aware of the financial impacts of any changes they make, and can therefore implement appropriate strategies to ensure they can continue to achieve financial independence at the time they want to."
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Adam Walkom
Co-founder at Permanent Wealth Partners
"I am not surprised by this but for slightly different reasons. My guess is a lot of the "fear" is driven by the uncertainty of their own situation. Most people simply don't understand where their finances are and what they're doing. In this context, it's about women but the same can be said for any group of people. Not understanding your current financial situation and the path you are on creates significant stress and yes "fear". However, this is not to belittle the situation some older women find themselves in."
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Daniel Wiltshire
Actuary & IFA at Wiltshire Wealth
"Pension inequality between the sexes is an absolute travesty and should get more attention. Be it the recent revelations that the DWP have underpaid tens of thousands of married, divorced and widowed women, under funding due to time off caring for children or elderly relatives, or the fact that reduced final salary spouses pensions disproportionately affect women. Additionally, it's estimated that just 12% of divorce cases involve formal pension sharing. All of these factors can leave women in a potentially vulnerable position approaching retirement."
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Petronella West
Chief Executive Officer at Investment Quorum
Petronella West: “I have a female client at the moment who took a career gap to bring up her children, and is now worried about her pension. On the basis that a client has reasonable longevity, we think that it is worth topping up your state pension. The first step is to check your National Insurance record online to check the number of years which you have not paid any contributions. I advised my client to pay £700 for every year that she wasn’t working into the State Pension Scheme. Effectively what she is doing is paying the equivalent of national insurance contributions that she would have paid if she was working – no more or less. What she ends up with is a £10,000 a year full state pension from the age of 67 – which is linked to inflation. It is also important to note that when you claim child benefits as a non-working mother you gain credit towards the state pension without having to pay anything”.