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In the realm of financial planning, pension planning is a crucial aspect for many adults, with nearly half (44%) considering themselves as 'pension planners'. However, a significant number (22%) admit to being unsure about retirement planning, according to a recent survey conducted by Aviva.
The survey, which polled more than 2,000 adults, including 1,370 in relationships or married, sheds light on the differences in pension planning behaviour between men and women. Men are more likely to identify as 'pension planners' (54%) compared to women (35%).
One of the key factors contributing to this gender divide is the gender pay gap, with women earning less than men on average. This pay gap, which is 7% in the UK, directly impacts the capacity to contribute to retirement savings. The gap often widens with age, worsening women’s pension potential over time.
Another factor is career breaks and part-time work. Women are more likely to take career breaks or reduce working hours due to caregiving responsibilities, which reduce pension contributions and savings longevity. Women also disproportionately occupy part-time roles, which often exclude them from workplace pension schemes or reduce their contribution opportunity.
Engagement and planning attitudes also play a role. Men are generally more likely to consider themselves primary pension planners, while women are sometimes less confident about their pension knowledge or more candid about uncertainties, resulting in lower proactive pension planning or delayed engagement.
The results suggest a gap in communication and self-awareness in couples regarding pensions. Among those earning £35,000 or less per year, 33% are 'pension planners', while among 45 to 54-year-olds, 32% identify as 'pension planners'.
It's important to note that merging pensions can save on paperwork and costs, but it's not always advisable because you can risk losing valuable benefits attached to employer schemes. The Government's free pension tracing service is available for finding lost pension pots, but be careful when searching online as many companies with similar names may pop up, some of which could be fraudulent.
A standard for a minimum, moderate, and comfortable retirement has been devised by the pension industry. The minimum standard does not include income tax, housing costs, or potential care costs in later life. The standards for a minimum, moderate, and comfortable retirement are £21,600, £43,900, and £60,600 a year respectively for a couple.
In conclusion, the gap in pension planning and outcomes is driven by factors such as lower earnings, caregiving-related career interruptions, less engagement or confidence in planning, and structural exclusion from pension schemes. These factors intersect to put women at a financial disadvantage for retirement, necessitating targeted policies and support to close the gender pension gap.
Investing in pensions is significant for personal-finance and retirement planning, as highlighted by the Aviva survey, where men were more likely than women to identify as 'pension planners'. The gender pay gap, which impacts the ability to contribute to retirement savings, is one factor contributing to this disparity.
In light of the differences in pension planning behavior, it may be beneficial for couples to engage in more open communication about their pension plans and make informed decisions about merging pensions or seeking out lost pension pots using the government's free tracing service.
