By guest blogger Ralph Zoing, Director at Harrogate Wealth Management

In my previous article I highlighted how pensions are the most effective way to save for your retirement.

I also explained how women could face a massive £185,000 gender pension gap in retirement, with women in their 20’s retiring with £100,000 less than men – and requiring £85,000 more in their pension pots for retirement. 

There are a number of factors at play here. Firstly, women will tend to have interrupted working patterns and already suffer from an inequality in pay from employment.

This will have a direct impact on the amount that women are able to pay into their private pension provision. Secondly, women have longer life expectancy, and they therefore need their own pension pots to last longer, up to 10% more.

Thirdly, living longer increases the likelihood of having to fund some sort of long-term care provision.

Finally, there is an argument that an indirect gender discrimination exists in the way in which many women are excluded from being automatically enrolled into a pension scheme and in the average level of state pension awarded to men and women.

This is not projected to be fully addressed until around 2041 (but only for people reaching State Pension Age from that year)

Even if pension equality is achieved through pension sharing at the time of divorce, pensions inequality can reappear in subsequent years.  Often it is the husband who can accept a pension debit on divorce and then has the means to make good any losses in pensions through his ability to earn and save in future years. 

Women often find themselves thrust into the role of earner with limited experience, qualifications and retain their responsibility as the primary child carer. Their ability to earn and save significantly towards their new future is often limited and there is often another divergence in the pension provision of former husband and wife.

The Social Market Foundation (SMF) said: “This has continued to increase the need for better advice and guidance for workplace pensions, since it increases the complexity of the pension landscape for many people.” 

Only detailed financial planning that takes into account an individual’s investment preferences, risk profile and tolerance for loss, will lead to successful results.

Building up pension assets that benefit from greater flexibility in retirement will mean more than ever that expert financial advice and guidance will be required – not just during the accumulation phase, but also continuing into retirement, when benefits are taken flexibly.

We have already seen an increase in the number of pensioners opting to go into drawdown versus annuity purchase and we believe that this trend will continue.

It seems obvious to say, it but most financial remedies will involve pension assets and they should be closely examined to ensure that any pension share, offset, or attachment is suitably applied to the relevant assets which will ensure the best outcome for women. 

With over three decades expertise in the financial services industry, Ralph Zoing can advise on all forms of pension and retirement planning. Tel 01423 530277 or Ralph@harrogatewealth.co.uk

For queries on divorce, finances, or any aspect of family law, call Jones Myers at Leeds on 0113 246 0055, Harrogate on 01423 276104, or York on 01904 202550. Visit jm2023.jonesmyers.co.uk, email info@jonesmyers.co.uk or tweet us @helpwithdivorce

The post Why women need more help to address the pension gender gap: Part 2 appeared first on Jones Myers.

Here at Jones Myers we have long campaigned for legislation that supports unmarried couples – whatever their gender – and their children, in the same way as their legally wedded counterparts, should the relationship break down.

With the Joint Committee’s scrutiny of the forthcoming Marriage (Same Sex) Bill the time is right to address the potential for gender discrimination in all cohabitating relationships. Enabling opposite sex couples to enter civil partnerships will go a long way towards creating the security and protection for vulnerable families that has been long overdue.

However, the law moves slowly and it could be many months or even years before heterosexual couples have the legal rights offered by civil partnerships. Therefore, we recommend partners who live together draw up a cohabitation agreement to avoid one party being left destitute should the relationship flounder. In cases where one or both parties have been previously divorced, the needs of the ‘first family’ children will be a key consideration when couples opt to live together rather than marry a second or third time around.

The questions we encourage partners to consider are rooted in the ‘what if’’ scenario. Hard as it may be to contemplate the emotional and financial impact of one party leaving, dying or inheriting wealth, planning for these situations can be a helpful safeguard against later trauma.

Couples with children from a previous marriage should consider these questions in particular:

• How will you ensure that your children, including those from a previous relationship are protected financially and emotionally in the event of your death?
• Should a property be in joint names and if so what shares will the ownership be?
• What happens to that property if one of you dies and can the survivor stay in that property forever or at all? What about financial support for the survivor?
• When do your children receive your part of the property as their inheritance?

Our legal and financial experts help each party to look at these issues in ‘round table’ meetings, leading up to, and beyond, signing a cohabitation agreement as regular reviews will take account of any changes in personal circumstances.

At the present time such cohabitation agreements are enforceable with the courts supporting the rights of cohabitees in financial and capital claims.

Let us hope that before too long, the legislative process on these matters catches up with society’s needs and the reality of millions of people’s lives.

The post Another small step in the right direction for cohabiting couples appeared first on Jones Myers.