Commenting on the need for greater awareness and action on the Gender Pensions Gap on the first day of Pension Awareness Week, Kathryn Fleming, Partner, Hymans Robertson says:

“As we begin Pension Awareness week, there is no better time to draw attention to one of the biggest issues facing our industry – the gender pensions gap. The gap between pension savings for men and women, is a pressing priority with research* predicting there is a 47% difference in pension savings by the time women reach their late 50s. We’d encourage women to look at the pensions they have, particularly any from previous roles that may have been forgotten about, and really try to understand what they will need in retirement and what their current position is and take steps to improve their position, such as increasing contributions, if they can.

“But the onus should not only be on women themselves.  It is also vital that employers play their part. They must consider both their contribution structures and the way they engage with their employees. Staff must have access to, and awareness of, any digital apps that can help with decision making. Throughout the pandemic we have seen the important role employers have had regarding the wellbeing of their staff, and we would urge this concern to extend to financial wellbeing as well, given the detrimental impact this can have.“

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Commenting on the need for industry action on the Gender Pensions Gap, Kathryn Fleming, Partner, Hymans Robertson says:

“One of the biggest impacts on the Gender Pension Gap is the gender pay gap, where in a like for like starting position, women will on average be saving less for retirement. However, as we reach the midpoint of Pensions Awareness Week, is its worrying to see that in 2022 the gap between men and women remains significantly impacted by the fact that women are more likely to undertake part-time employment due to childcare and caring responsibilities. Research by the Pensions Policy Institute shows that female working patterns have almost twice the impact of the gender pay gap and this significantly impacts their pension. To qualify for pensions auto enrolment, an individual has to be earning over £10,000 a year which many women miss out on.

“To help close the gap we would welcome the removal of the lower earnings threshold for auto-enrolment, so that all workers regardless are included. It would prevent large groups of part-time workers, mainly female, being excluded for no real reason. We would also like pension contributions to be based on all earnings. As a firm, we would like the government to introduce an Auto Enrolment Carers Credit to help minimise the widening gap that can disproportionately impact women. It is clear that policy changes are required and with a new Prime Minister we would love to see the industry back the need for this change, and make the Gender Pension Gap a priority.”

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Commenting on the need for the need for the industry to do more to demystify pensions, Rona Train, Partner, Hymans Robertson says:

“In this Pensions Awareness week, we’re appealing to those who are thinking about halting their pension contributions to think about opting down, rather than opting out of their pension scheme, if this option is available to them. By doing this they’re taking care of their immediate need to have more cash to pay their rising bills but also continuing to lay a strong foundation for their longer term future.

“Over the coming months, many people will need to consider areas of their life where they could cut back. Some will have to do that more than others and some might see their pension contributions as a suitable candidate for the cut. While this may be a last resort for some, for many, that could be the wrong decision. We’re all living longer. Figures from the ONS show that, in 2020, the UK had its highest ever number of centenarians  - 15,120 – so continuing to plan for the future where possible is also important.

“Many people simply don’t understand their pension and Pensions Awareness Week is important so we can share information and help to demystify such a crucial part of our futures. Everyone involved in the pensions industry should use this as a chance to lose the jargon and speak plainly about the role of pensions. Now more than ever people need to feel empowered to make the right choices.”

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Commenting on the need for increased awareness of how tax impacts people when they come to withdraw from their pension pot, Kathryn Fleming, Partner, Hymans Robertson says:

“This Pensions Awareness Week we’ve talked about many key issues and tax is one that can’t be missed. By the time people reach the point of withdrawing from their pension pot our research has shown many are still unclear about how tax will impact them. Many don’t know when and how they will be taxed. For example, if you withdraw your full pension pot you will be liable to tax, as you can only take out a 25% lump sum tax free. Instead there are options to take small chunks of money at a time, and 25% of each chunk will be tax free. We’re urging people to get a really good understanding of the tax implications of their options before they exercise them, to avoid the risk of making grave financial errors as they approach retirement.

“Another key tax element to consider is that payments from pensions are also added to any other income being received and for some a sudden increase could trigger a move into a higher tax bracket, meaning a higher tax bill than usual. When planning for retirement, getting some guidance or advice can help you think about how to maximise personal allowances and make use of other tax efficient savings to reduce potential tax bills.

“And finally, there are some retirement decisions that are irreversible, but we know the levels of understanding around these options are also low. There are lots of options, that at face value seem like a perfect solution, but because of their permanence they should not be taken up without at least having sought some kind of guidance. So even if access to independent advice is unavailable they should at least take a look at some of the free resources out there, such as booking an appointment with the government service Pension Wise. Different options will work better than others for different retirement needs, be that providing a steady income, saving something for loved ones, setting aside money for funeral cost or long term care, or paying off a mortgage.”

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*Now Pensions