YOUR ROAD MAP TO FINANCIAL FREEDOM
There are plenty of reasons why your pension pot may have taken a battering this year – global pandemic, stock market crisis, recession... Here’s what you should be doing to get your savings in the best shape possible
Get your pension pot in shape this year
You need to save enough to provide an annual income
There are many obstacles that get in the way of women being able to build pension savings: typically, we earn less than men over the course of our working lives (there’s a 15.5% gender pay gap, according to the Office for National Statistics), on average we live longer and we take more career breaks to look after the young and old. And now, there’s the financial fallout from Covid-19.
Women make up
75% of the part-time workforce and as part-time work tends to be in the sectors most affected by furlough, lockdown and redundancy, they’ve been the hardest hit by the pandemic. A recent report* revealed that more than 300,000 women working part-time lost their jobs directly as a result of Covid-19, and those on zero-hour contracts are not getting paid work*. ‘The global pandemic has magnified the structural issues and inequalities that already existed,’ says Jackie Leiper, managing director of workplace savings at Scottish Widows.
But it’s not all bad news. ‘While many families have suffered financially during the crisis, some have had an unexpected windfall,’ says Steve Webb, partner at consultants Lane Clark & Peacock (LCP). ‘By not spending on travel or socialising, they have become “accidental savers”, clearing debts. For those who have built up a cash balance, investing it in a pension can be a great idea. This attracts an immediate top-up from the government and can be accessed from the age of 55.’
If you find it hard to get excited about pension planning, here’s a reality check: women, on average, live around 25 years after retirement, but the bills keep coming. So, between now and when you retire, you need to have saved enough to provide an income. The state pension will only cover the minimum and relying on a partner isn’t a great option. ‘The biggest risk to your future prosperity is burying your head in the sand and just putting your money under the mattress or in a bank account,’ says Rob Gardner director of investments at St James’s Place, ‘because you won’t be able to grow your money above inflation, so you’ll have less when you retire.’