Pension Annuity Considerations For Women

by Peter

Many women face an even more uncertain retirement than men, which is a huge worry considering their life expectancy is longer. When buying an annuity, all providers take into account your life expectancy so in order to stay equal women actually need to save more into their pension than men do.

However, with career breaks, bringing up children and lower salaries across the board, women have it tough.  NFU pension specialist

, Shelagh Hamer, says:

“The impacts of increased life expectancy and the raising of the State Pension Age are likely to be particularly felt by women. This is because women on average not only have smaller pensions savings than men, an issue often compounded by career breaks, but their higher life expectancy means that their smaller funds have to last longer.”

Women need to take full advantage of the tax breaks a pension fund offers.  If they do take a career break, try as hard as possible to continue to contribute to your pension fund. During a career break, women can still contribute the equivalent of their entire salary each year up to a maximum of five years.

The most recent ONS figures show that the median value of a man’s pension fund at the age of 50 – 54 is £116,000 compared to women in the same age group having a median value of only £60,000.

Of course, other savings can be used to provide an income but you have to bear in mind the effect of inflation and that ever-tempting option of dipping into the savings in time of need.

At retirement, if you do have a partner, then both should consider taking out a joint life annuity. This means that in the event of the death of one partner, the annuity will continue to pay out on until the second death. Also, consider taking out life insurance.

In the event of divorce, sadly a common occurrence the pension assets should be taken into consideration. Although you may forget about it, it is in most cases the largest asset in a marriage after the marital home.

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