Pensions and changes affecting women

The ages whereby individuals can start to draw their state pension have changed and women in particular are affected. A woman born after March 1955 will now need to wait until she is 65 before receiving a benefit and if she is aged 46 or under, she will now will have to wait until her 67th birthday.

Women who have stayed at home to care for children could be greatly affected. However either parent should get National Insurance credits if they have registered for child benefit – even if household income was too high to receive child benefit. A parent therefore may get Class 3 credits or Home Responsibilities Protection, but the latter needs to be claimed.

Whether single, divorced or widowed, there will be no difference between women and men in respect of the requirement to receive an adequate income. The state pension is even less effective for women as there can be no reliance upon the husband’s National Insurance contributions. The introduction of the flat rate pension from 6 April 2016 means each individual needs to qualify for this benefit in their own right. Anyone relying solely on a state pension for their financial wellbeing will be greatly disappointed. You can check your state pension age and likely pension benefit at www.gov.uk/state-pension-age

Some married women may be relying on their partners’ pension for income at retirement although this ignores the real possibility of situations such as death, divorce or separation in affecting these benefits. Both spouses should be making pension provision. With each individual having their own personal allowance before they pay tax in retirement, drawing income up to this threshold, currently £11,850(2018/19 tax year) makes a great deal of sense.

The introduction of automatic enrolment in the workplace has also encouraged many women to join a pension scheme for the first time and has given them the impetus needed to start considering their own retirement provisions. It is fair to say that a large proportion of women are still unclear as to how much they need to save in order to receive the kind of retirement that they wish for and those who have already started saving often underestimate the amounts required.

It is therefore now even more important that women take control of their finances. If you would like to review your current situation or want to discuss how you can plan towards a satisfactory income at retirement, then please contact Kim Williams at Kreston Reeves Financial Planning Limited www.krestonreeves.com E: kim.williams@krestonreeves.com
T: 0330 124 1399.

Kim Williams – Adviser at Kreston Reeves

www.krestonreeves.com/financial-planning