Closing the Pension Gap: Let’s Boost Our Contributions

The gender pension gap is reducing for those with private pension wealth, now standing at only 10% for women aged 35-39. But with a 35% gap remaining overall, it still lingers like a stubborn cold we can’t quite shake.

It’s well documented women often end up with less in their pension pots than men, due to career breaks, part-time work, and of course, the gender pay gap itself. In fact, a third (37%) of mothers leave the workforce to care for children.

Helpfully, there's a powerful strategy that you can use to close the gap. This strategy is utilising additional contributions.

Contributions to your pension aren't limited to just you or your partner. Anyone can pay into your pension, expanding the possibilities for building your retirement savings. So, if you need to take a career break this can ensure your pension isn’t being neglected. Depending on who is able to help you, different gifting rules may apply.

This strategy isn’t the only way to boost your pension prospects so here are ‘5 tips to close the gender pension gap’ for those without a partner or third party able to help out.

While this article can help you make the most of your money, it isn’t personal advice. If you’re not sure what’s right for your circumstances, ask for financial advice.

Pension and tax rules can change over time, and any benefits you receive will depend on your personal situation. You’ll usually need to be at least 55 years old (increasing to 57 from 2028) before you can access your pension funds.

Double-up on Pension Power

Getting organised with your pension is beneficial to everyone.

1. Have the money chat

   Let’s overcome the stigma, it’s time to talk about money. Sit down with your partner and chat about your pensions. You’ll both feel a lot better knowing you’re on the same page, working towards the same retirement goals.

2. Balance the load

   Adjust how much you each contribute based on your income and future plans. Make sure you’re both investing for those golden years.

3. Partner contributions

   Your overall pension investments get a boost, and you can still benefit from tax relief on those contributions.

   If your partner pays into your pension, the tax relief you’ll get will be based on your tax status. Even if you’re not earning, as long as you’re under 75, your partner can pay in up to £2,880 each tax year and you’ll receive 20% in basic-rate tax relief from the government. This adds up to a total contribution of up to £3,600, which is the most that can be paid into a non-earner’s pension and receive tax relief.

   If you are earning, they can pay in any amount up to your earnings. But this will usually be capped at your annual pension allowance (usually £60,000) to benefit from tax relief.

   Just make sure you check how much has already been contributed to your pension (either by yourself or your employer, plus any tax relief received) to make sure any additional contribution won’t take you over the limit.

4. Squeeze every drop from employer contributions

   If your job offers employer pension contributions, be sure to take full advantage of the benefits available to you. Double-check that you’re getting every penny you can.

   If you have a workplace pension, it’s worth speaking to your employer about paying in more. If you increase your pension contributions, they could pay in more too.

5. Prepare for the pause

   If one of you is planning to take a career break (whether for kids, caregiving, or just a well-earned breather), map out how to keep those pension contributions going so you don’t lose ground.

By using these strategies, you’re taking control of your future and doing your part to close the gender pension gap. With a little planning and teamwork, we can make sure everyone can retire without the stress of a smaller pension pot hanging over their heads. It’s time to tackle that gap and make retirement a whole lot brighter.