Women experience higher levels of debt, more career breaks and lower paid work, according to statistics released by HMRC on 6 March 2018. The figures indicate that, on average women not only earn less, but their income peaks at a much younger age.
Royal London has said that: “While much progress has been made more work needs to be done to improve the financial resilience of women in Britain today.”
In a bid to combat the inequality that women encounter, Royal London has assembled a “five point plan” to improve women’s long-term financial position.
Royal London has suggested that women “claim what is due to you” as they have found that annually billions of pounds worth of benefits go unclaimed. For example, Royal London’s analysis found that 63,000 mothers are losing out on National Insurance credits needed to “boost their state pension”, due to confusion and change surrounding child benefits. The firm believes that the total amount of future pensions rights lost since the change could exceed £1bn.
Due to auto-enrolment, recent DWP figures illustrate that the number of women saving into a defined contribution pension has increased by 33% since 2012. However, Royal London advises women to “top up” contribution levels, as the current minimum levels will “not provide enough to generate a decent income in retirement”.
Eight hundred and seventy thousand women hold investment ISAs, whereas over 1 million men are holding the same ISA, HMRC figures show. The firm suggested that women invest in a longer-term, lower risk investment which will generate a steady return over a longer period, building a “decent pot”.
Royal London personal finance specialist Helen Morrissey commented: “Initiatives like auto-enrolment will help women improve their financial resilience but there is more that can be done. For instance we need greater awareness of the benefits available to help new mums accumulate National Insurance credits towards their state pension entitlement and we must encourage more long term savings and investment behaviours. Once these behaviours become engrained we will see more women building a sustainable financial future.”
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