5 powerful ways women can get their pension back on track for a better retirement

By HarperLees

If you have friends or family members who are female and over the age of 35, they might want to consider an article by FTAdviser that makes for interesting reading. It reveals research that shows a quarter of women over this age have not saved anything towards their retirement.

The study, by HSBC UK, also found 56% of women above 35 had saved up to £1,000 into their pension, despite 94% saying they need up to £30,000 a year to fund their lifestyle.

If you know someone who could be in this situation, there may be some good news. You may know from talking with us about your own finances that it’s possible to boost your pension during your 30s, 40s and 50s, which could provide a better standard of living in retirement.

Read on to discover five ways someone you know who has a small pension might be able to boost their retirement fund, and enjoy the lifestyle they want when they finish work.

1. Create a financial strategy

Creating a financial roadmap could help improve the chances of your friend or family member reaching their retirement goals.

According to a study carried out by pension provider Aegon, those who create a wealth strategy do better financially, yet 13% of people create a long-term plan.

By working with clients to create financial strategies, we can help them achieve their long-term retirement aspirations while maintaining their current lifestyle. Additionally, we can help establish a financial “safety net”, increasing the chances of their retirement ambitions being met, no matter what happens in life.

2. Boost pension contributions

The money contributed to a pension typically receives tax relief, which means that a basic-rate taxpayer pays £80 for every £100 that goes into their retirement fund. Those who are higher-rate taxpayers pay just £60, and additional-rate taxpayers contribute £55 for every £100 placed into a pension.

Remember though, that the amount of contributions that receive tax relief is limited to the Annual Allowance, which in 2022/23 is the amount the pension holder earns or £40,000, whichever is lower.

If your friend or family member is a high earner, they may trigger the Annual Allowance tapering rules, which could reduce the allowance to £4,000 (2022/23). We’d be happy to confirm whether this would be the case, and what options they might want to consider.

3. Re-evaluate risk

While having too much risk can be damaging to wealth, so can not having enough. This is because pensions are investments and typically consist of assets such as stocks and shares, bonds and cash.

As potential growth is usually provided by the higher-risk assets like stocks and shares, not having enough exposure to them could reduce the potential growth of a retirement fund. This could mean that a pension does not grow to the size needed to support the required standard of living in retirement.

With this in mind, we can confirm the level of risk within a friend’s or family member’s existing pension, and whether it could provide the potential growth needed for their retirement goals. If it doesn’t, we can investigate options that might provide greater potential growth while retaining a level of risk they’re comfortable with.

4. Locate lost pensions

According to Pensions Age, an estimated 1.6 million pension pots worth £37 billion have been “lost” or are dormant in the UK. Finding a lost pension or reactivating a dormant one could provide a much-needed boost to a retirement pot.

This is something we can assist with, and once the pension is found, explain the options available to the pension holder. One option, for example, might be to consolidate it with other pensions, which may improve growth potential and help reduce fees.

5. Use carry forward

If your friend or family member has a significant lump sum, perhaps because of an inheritance, they might want to consider using “carry forward”. This could allow them to use unspent Annual Allowance from the previous three years, meaning they might be able to make a contribution of up to £160,000 in 2022/23 and still receive tax relief.

This could provide a significant boost to their retirement fund, meaning a better standard of living when they finish work.

Get in touch

For more information on reaching retirement goals, read our recent guide, which provides many useful tips.

Alternatively, if you feel someone you know would benefit from a conversation with us about their pensions or retirement strategy, we’d be pleased to speak with them. If they are happy for us to contact them, we’d be pleased to do so.

If they would rather contact us, we can be reached by emailing info@harperlees.co.uk or calling 01277 350560.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.