The Freedom Kit: Three steps to ensuring your pension is working hard enough for you

If you’re not completely up to speed with your pension position or your entitlements, don’t fret: just 46 per cent of Irish people understand how their pension works, according to research from the Bank of Ireland last year.

But it’s important to address this knowledge deficit, particularly for women, given that a 37 per cent gender pension gap exists between men and women in Ireland.

The number of women working, and the fact that less women have supplementary private pensions, partly explains the pensions gap. So too does the gender difference in full-time and part-time workers, with the latter less likely to be enrolled in private pension plans.

Additionally, the structure of the pension system itself can exacerbate gender disparities. For instance, women are less likely to have access to occupational pension schemes, particularly in sectors with traditionally lower female representation.

Moreover, the reliance on contributory-based pensions may disadvantage women who have had intermittent or lower-paid employment throughout their careers.

Often women are not in a position to work outside the home, due to caring duties or the cost of childcare. Those relying on their partner’s pension should understand their pension, and what they can expect from it.

And in the case of separation or divorce, it’s important to ensure that any pension assets accumulated during a marriage are fairly divided between spouses.

With an ageing population, government policy for the state pension is suggesting that the age for receiving this entitlement will be pushed to age 68. So, even though most have to retire at 65 or earlier, the need to bridge the gap with a private provision is even more important.

There are a number of measures women can take to address the pension gap, with the below three steps being the best place to start.

Maximise contributions

There are two main ways that women in particular can secure better pensions in retirement.

Firstly, where circumstances allow, they should work longer. This will help secure the maximum contributory State pension.

Secondly, women should aim to contribute as much as possible to their pension funds throughout their careers. This may involve participating in employer-sponsored pension schemes or making voluntary contributions to personal retirement savings accounts (PRSAs).

Women should take advantage of any occupational pension schemes offered by their employers. These schemes often include employer contributions, which can significantly boost pension savings over time.

For young women looking at job options, the offer of an employer pension contribution may not be so relevant to their living standards today; but pension provision is a very attractive benefit that will make a huge difference when they are no longer working.

Information is power

Women should stay informed about their pension entitlements and any changes to pension regulations or tax laws.

Understanding their pension options and rights can help women make informed decisions about their retirement planning.

Women can advocate for themselves by negotiating fair pay and benefits in their workplaces. This includes asking for equal compensation for equal work and seeking out opportunities for career advancement that will lead to higher earnings and better pension prospects.

Seeking advice from financial professionals can help women develop personalised retirement savings strategies. Financial advisors can provide guidance on pension planning, investment options, and retirement income projections.

The practical checklist you need

• Start your pension today. However little you can afford to save, the sooner you start, the more you will have in retirement.

• If you prefer to be a pension ‘saver’ than a pension ‘investor’, make sure your fund is invested in lower-risk assets that you are comfortable with – a financial advisor will explain your options.

• Secure your contributory State pension by working as long as necessary.

• If you are married and relying on your partner’s pension in retirement, find out more about their pension, and what you can expect from it.

• If you are separated, get your own advice in relation to splitting the pension under a pension adjustment order.

Carol Brick is Managing Director of CWM Wealth Management and HerMoney. A qualified financial advisor, she specialises in the area of Asset and Wealth Management. See hermoney.ie or cwmwealthmanagement.ie for more details.

About HerMoney

HerMoney provides tailor-made financial solutions to self-employed professional women and service contractors all over Ireland. With offices in both Cork and Dublin, the business is a sister company to the long-established CWM Wealth Management.