Women and Pensions: How to Close the Career Break Gap
Life rarely follows a straight path, and careers are no exception. This is particularly true for women navigating pensions.
Many women take time out to raise children, care for relatives, or explore different opportunities, factors that directly impact both women and pensions.
While these choices are invaluable personally, they often come with an unintended consequence: a gap in pension contributions for women.
Over time, this can leave women with smaller retirement pots than men, which can be worrying. The good news is that it’s never too late to take steps to rebuild your pension and plan for a secure future.
Understanding the Pension Gap
Research consistently shows that women have lower pension savings than men, particularly in their 40s and 50s, because of these gaps.
The reasons are varied: career breaks, part-time roles, lower pay, and time spent outside the workforce all contribute. Women retire with significantly less wealth on average, meaning retirement planning is more critical than ever.
Awareness is the first step. Understanding how career breaks have affected your pension can help you make informed decisions about your savings and future contributions.
Reviewing your pension statements, checking your current pot, and calculating projected income can provide clarity and peace of mind, especially important regarding women and pensions.
Rebuilding Momentum
Once you know your starting point, it’s time to take action. For women, increasing pension contributions or returning to work is one way to rebuild momentum.
Many employers offer pension schemes with matching contributions, and taking full advantage of this “free money” is an effective way to boost your pension pot.
Even small increases can make a noticeable difference. For example, increasing your contribution by just 1–2% of your salary can grow substantially over time thanks to compound interest.
Compound growth works best the earlier you start, but consistent contributions can significantly improve your retirement outlook even in mid-life.
If you are self-employed or between jobs, personal pensions or SIPPs (Self-Invested Personal Pensions) remain available.
Contributions benefit from tax relief, meaning every £80 you pay in can become £100 in your pension pot, giving your savings a valuable boost and impacting women and pensions positively.
Read why women are handing over their pension planning
Using the State Pension and Filling Gaps
The State Pension is an important part of retirement planning. For women who have taken career breaks, it’s worth checking your National Insurance record to ensure you have enough qualifying years to receive the full entitlement.
If there are gaps, voluntary National Insurance contributions can help top up your State Pension, sometimes making a significant difference in your retirement income. This is crucial for the conversation on women and pensions.
Making Saving Manageable
Rebuilding a pension doesn’t have to feel overwhelming. Start small and build gradually.
Set up automatic contributions to make saving easier and less stressful. Monitor your progress periodically, and adjust contributions as your income and financial circumstances change.
It’s also important to balance pension contributions with other financial goals, such as paying off debt, saving for a home, or building an emergency fund.
A holistic approach ensures that you do not put yourself under undue financial pressure while still making progress on your retirement plans, key when discussing women and pensions.
Seek Guidance When Needed
Financial planning can feel complex, particularly when navigating career breaks and changing employment situations.
Speaking with a professional adviser can help you understand your options around pensions, make informed decisions, and feel more confident about your future.
Advisers can provide personalized strategies for increasing contributions, taking advantage of tax relief, and balancing long-term goals with short-term needs.
Final Thought
Career breaks and part-time work should never be a source of worry.
You can steadily rebuild your retirement savings by understanding your pension situation, making incremental contributions, taking advantage of employer schemes and tax relief, and checking your State Pension, ensuring women’s tangible success in their pensions.
It’s never too late to start planning; every step taken now helps create financial confidence and security for the future.
Please contact us today to see how we can help you with your pension decisions.
