A report by Friends Life has revealed that more needs to be done to ensure women's long-term savings are not hampered by the impact of starting a family.
The latest Visions of Britain 2020 report has exposed a worrying number of women who are less clued up about pensions than their male counterparts, and the company is urging employers to do more to combat the issue.
The report has also found that almost half (49%) of women do not save into an employer-sponsored pension scheme. A further one in ten are unsure if they save at all.
Kim Clarke, Head of HR at Friends Life, commented:
"We believe that employers may well consider the short-term financial impact of female employees starting a family through supportive flexible working practices but what about the long-term impact? When women return to work they often go back part time in the first instance, meaning that the percentage of their salary that they can save is much smaller, while at the same time their outgoings have increased. Unless drastic changes are made, many women may find that starting a family could negatively affect their retirement pot."
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More needs to be done for working mums' pensions
Action on short service refunds and small pension pots
The Minister for Pensions, Steve Webb, has promised to protect the pension pots of people who move jobs often by abolishing Short Service Refunds for defined contribution occupational schemes. These refunds allow individuals to get their pension contributions back – leaving them without a pension.
The Minister also committed to taking action to prevent people losing small pension pots. A recently published paper looks to address the complexities in the current system that make it difficult for people to transfer their pension pots throughout their careers into one big pension.
Steve Webb said:
"I am concerned that people are at risk of losing their small pension pots as they move from job to job. I do not want to see people who are doing the right thing by saving, ending up with very little for their retirement because the system is too complicated. I want to make it as easy as possible for people to grow big fat pension pots."
A highly mobile jobs market and the introduction of automatic enrolment will lead to around 4.7 million additional small pension pots in our pensions system by 2050.
With the average person working for eleven different employers over the span of their career it’s vitally important that barriers are removed to growing big fat pension pots.
Options for consultation range from small changes to encourage transfers, to an automatic transfer system where pension pots could either be consolidated in one or more ‘aggregator’ schemes or move with people from job to job.
