Mid 50s women pension crisis

02/06/2011

For many years the age at which you can claim your state pension benefits has been 65 for men and 60 for women. 

Recently however, a number of mid-50s female clients of Census Financial have expressed concern at how future increases in the state pension age could affect them. So if you think you might be affected, here are some suggestions as to what you might do:

It’s likely that about 330,000 women aged between 56 and 57 will be hit hardest by the Pension Bill reforms. If you fall into this category, the first step is to find out exactly when you will get the State pension under the new rules.  Here’s a very rough guide for women:

• Under 32s                                                can get state pension at 68
• Aged between 32 and 41               can get state pension at 67
• Aged between 42 and 57               can get state pension at 66
• Aged between 56 and 60               can get state pension at 60-65
• Older than 60                                        can get state pension at 60

For most women, we believe that the best approach for long-term saving may be a blend of pensions and Isas. Pensions provide the benefit of tax relief but do not offer access, whereas with an Isa, you can save up to £10,680 a year tax-free and access the cash whenever you like.

Women now aged between 56 and 57 will benefit from the universal State pension.   This is set to deliver a flat rate income (expected to be the equivalent of about £155 a week)  and is due to start in 2016. This new pension will remove means-testing so people should benefit from every penny saved.

It’s a good idea to check your employer’s pension provision to see whether you are eligible to join, or if you can increase contributions.  Also, find out whether your employer offers a salary exchange.  This is a tax-efficient way to invest more of your wage in a pension.

Avoid taking risks with your investments and pensions, particularly in your 50s.   Keep an eye on your existing savings and investments to see how they are performing and switch where necessary. Possibly your best approach is to spread any risk by investing in a broad range of equity funds, fixed-interest bonds and deposit savings.

If in doubt, simply contact us here at Census Financial on 028 9066 8700.

Paul Nevin 

Business Development