Women could get £875-a-year ‘family carer’ pension top-up to plug gender gap – The Sun

WOMEN should get a £875-a-year pension top-up to help close the gender gap in retirement, suggests a pensions firm and think tank.

Typically, women retire with £51,100 in their pot, a third less in than men who have £156,500 to live off when they stop working.

This is largely because many women give up full-time jobs to take on more caring responsibilities.

Under the proposed plans, the government would top-up retirement funds of family carers who have had to stop working or taken on part-time roles to do so.

The booster amount would be equal to the eight per cent minimum contribution that's currently paid by workers on the national living wage, currently £8.21, and employers in the auto-enrolment scheme.

The top-up would cost the government £2.7billion and will be paid on top of child benefit and credits that go towards the state pensions.

Top tips to boost your pension pot

DON'T know where to start? Here are some tips from Aviva on how to get going.

  • Understand where you start: Before you consider your plans for tomorrow, you'll need to understand where you stand today. Look into your current pension savings and policy and research when you’ll be eligible for the state pension, and how much support you’ll receive.
  • Take advantage of your workplace pension: All employers are legally required to provide a workplace pension. If you save, your employer will usually have to contribute too.
  • Track down your pensions: If you've moved jobs a lot, this means you'll have several pension pots. It can be hard to keep track of them all, but the government offers a free pension tracing service to help you.
  • Take advantage of online planning tools: Aviva and Royal London have tools that give you an idea of what your retirement income will be, based on how much you're saving.
  • Find out if your workplace offers advice: Many employers offer sessions with financial advisers to help you plan for your future retirement.

NOW: Pensions and the Pensions Policy Institute (PPI), who put forward the proposals, argue that the government would end up earning more VAT as women will have money to spend in retirement and will be less reliant on the state.

NOW: Pensions also wants auto-enrolment to kick in from the first £1 of workers' salaries rather than on earnings over £6,136, which is the current system.

Research by the pensions specialists revealed that seven in 10 mums have not considered returning to work due to childcare costs, despite nine in 10 wanting to.

The difference in working patterns causes 31 per cent of the gender pay gap in retirement.

Meanwhile, the gender pay gap between men and women during their working life time accounts for 19 per cent of the shortfall in women's retirement funds.

Many women also fall victim to the "part-time pensions penalty".

What is pension auto-enrolment and how does it work?

HERE's what you need to know

  • What is pension auto-enrolment? Since October 2012, employers have had to enrol their staff into workplace pension schemes as part of a government initiative to get people to save more for retirement.
  • When does auto-enrolment apply? You will be automatically enrolled into your work's pension scheme if you meet the following criteria:
    – You aren't already in a qualifying workplace scheme.
    – You are aged at least 22.
    – You are below state pension age.
    – You earn more than £10,000 a year in 2019/20.
    – You work in the UK.
  • How much do I contribute? There are minimum contributions that you and your employer must pay.
    Minimum contributions are being gradually increased over time.
    Your minimum contribution applies to anything you earn over £6,136 up to a limit of £50,000 (in the tax year 2019/20). This includes overtime and bonus payments.
    From April 2019, a minimum of 8 per cent must be paid into the pension, with you contributing 5 per cent and the employer paying at least 3 per cent.
  • What if I have more than one job? For people with more than one job, each job is treated separately for automatic enrolment purposes. You can still opt out of individual schemes if you want.
    Each of your employers will check whether you’re eligible to join their pension scheme. If you are, then you’ll be automatically enrolled in that employer’s workplace pension scheme.

This is where the part-time salary doesn't meet the £10,000 a year in a single a job threshold to be auto-enrolled into a pension scheme and as a result, they miss out on vital employer contributions.

The pensions specialist also points out that women need to save between five and seven per cent more than men during their working life because on average they live three-years longer.

Joanne Segars, chair of Trustees at NOW: Pensions said: "While it’s encouraging to see that more women than ever are in work, more needs to be done to ensure that they have an equal opportunity to save for a comfortable retirement.

"Whilst auto enrolment continues to give workers the head-start they need to prepare for their retirement, the focus no needs to be on helping mothers return to the workforce."

Daniela Silcock, head of policy research at the PPI, said: "While policy changes, most notably the introduction of a family carer top up and [auto enrolment] contributions paid on every pound of earnings, go some way to closing the gender pension gap, further social, policy and labour market changes would be required to close the gap entirely.

"More affordable and accessible childcare plus flexible working options, would enable more women to return to work and recommence saving into their pension pot earlier."

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