Retirement planning for women

Pension entitlement for women are generally lower than for men:

• A woman's average income in retirement is just 57% of a man's.*
• Only 16% of recently retired women are entitled to a full basic state pension in their own right.*
• One in five single women pensioners face poverty in retirement.*
• Retired men, on average, have between £50 and £100 per week more private pension income than women of the same age.*

This is because women generally have less opportunity to build up pension rights because:

• Careers can be interrupted by periods spent caring for families or sick/elderly relatives - after having a baby, half of women stop saving for retirement. The figure for men remains unchanged when they become new fathers.
• On average, women earn less and work fewer hours than men.

As a woman, you may also suffer because:

• In the past, as an employed married woman you chose to pay lower Class 1 National Insurance contributions that did not qualify for the basic state pension and other state benefits.
• You have not had the benefit of membership in occupational or personal pension schemes.
• You are likely to live longer than a man, which means that an income is required to cover a longer period of retirement.
• Changes in legislation will increase the state pension age for women from 60 to 65 for those retiring between 2010 - 2020 and then to 68 for both men and women between 2024 and 2046 which will affect anyone born after 5 April 1959.
• If you retire at the same time as your husband you may further disrupt your state pension contribution record.

Please note: The effect of the above issues will be reduced by the Government's plan to change the law, entitling a person reaching state pension age on or after 6 April 2010 to a full basic state pension after completing 30 years' qualifying service, rather than the current 49 years for men and 44 for women. This will mean that more people, particularly women, will be entitled to a full basic state pension.

In addition, some women may be able to boost their state pension by paying for missed National Insurance contributions at a reduced rate but must act quickly.

Many feel that in the future, women's working patterns will simply converge with men's. Therefore women's pensions will gradually cease to be an issue. However, there continues to be a greater likelihood of women undertaking unpaid caring commitments; raising children or caring for older people and disabled people. This means that women will continue to suffer severe disadvantages compared to men when it comes to building up a pension.

Women are also more likely to suffer a reduction in retirement provision in the event of divorce

Family and partnership patterns are changing, making independent provision essential for all.

• By 2020, it is estimated that there will be almost as many divorced women between age 65 and 75 as widows - about one in five women will enter later life divorced.*
• The number of cohabiting couples, estimated to be 1.56 million in 1996, is projected to almost double over the next 25 years.*
• Almost two-thirds of divorced and separated older women (63%) have no private pension income at all.*

*Source: Equal Opportunities Commission (EOC) September 2005.

Both men and women should aim to establish their own independent pension provision to ensure a retirement income on which to live comfortably. Your Barclays Financial planning Manager can help you achieve this.