Pension Wealth Gap
Discussion
I saw on Sky News today there's a campaign group complaining that women have 33% less in pensions than men due to stopping or reducing pension contribtuons due to childcare responsibilities.
I'm not disputing this, although it could be said there are other factors and understand it's a problem. but I'm not really sure what they expect the government, employers, pension providers or anyone else to do about it. If you work less due to childcare responsibilities (male or female) you will earn less and therefore you and your employer will contribute less to your pension.
Do they want a top up to what they would earn if they weren't responsible for childcare? In previous companies I've worked in when on maternity leave your pension contributions are the same as your full pay.
Just wondering what any PHer's do regarding pensions for the main carer. Do you split pension contributions between the two?
My thought is if your married it doesn't matter who's pension pot is bigger and if we get divorced it will get split anyway. Not sure how this works for single parents though and they have it tough as it is.
I'm not disputing this, although it could be said there are other factors and understand it's a problem. but I'm not really sure what they expect the government, employers, pension providers or anyone else to do about it. If you work less due to childcare responsibilities (male or female) you will earn less and therefore you and your employer will contribute less to your pension.
Do they want a top up to what they would earn if they weren't responsible for childcare? In previous companies I've worked in when on maternity leave your pension contributions are the same as your full pay.
Just wondering what any PHer's do regarding pensions for the main carer. Do you split pension contributions between the two?
My thought is if your married it doesn't matter who's pension pot is bigger and if we get divorced it will get split anyway. Not sure how this works for single parents though and they have it tough as it is.
The other way to look at it is how much does the state value a woman who gives up work to raise the next generation ?
My own mother was financially penalised for taking time out of the workplace to raise children and as such her state pension suffered as it did for countless others
Not everyone has a high earning partner ( except on PH ) who can make up the lost difference in workplace/state pensions
My own mother was financially penalised for taking time out of the workplace to raise children and as such her state pension suffered as it did for countless others
Not everyone has a high earning partner ( except on PH ) who can make up the lost difference in workplace/state pensions
My wife hasn’t had paid employment since our last oldest was born 34 years ago and prior to that paid virtually no NI.
She has accumulated around 18 years of contributions thanks solely as you say to child benefit receipts and hence contribution.
At her nra she will therefore get around 50% of whatever I get having contributed the full 35 years worth.
Tbh I thought for her this was actually quite generous seeing as it was a free benefit ( and yes I know I paid tax on it ).
She has accumulated around 18 years of contributions thanks solely as you say to child benefit receipts and hence contribution.
At her nra she will therefore get around 50% of whatever I get having contributed the full 35 years worth.
Tbh I thought for her this was actually quite generous seeing as it was a free benefit ( and yes I know I paid tax on it ).
Personal circumstances dictate.
We both work but she pays the minimum to get the employer contributions and I put a lot more in.
For example, a basic rate taxpayer puts in £80 and gets £85 on the way out. As a higher earner you can at best put £38 in (effective cost compared to take home pay) and net £85 back out with basic rate in retirement, or £70 if higher rate in retirement.
Therefore, makes no sense to pay extra to make them even. There is some consideration for having a spouse's pot be big enough to use their personal allowance after retiring and before state pension kicks in though. £120,000 for example would be about right retiring at 60.
We both work but she pays the minimum to get the employer contributions and I put a lot more in.
For example, a basic rate taxpayer puts in £80 and gets £85 on the way out. As a higher earner you can at best put £38 in (effective cost compared to take home pay) and net £85 back out with basic rate in retirement, or £70 if higher rate in retirement.
Therefore, makes no sense to pay extra to make them even. There is some consideration for having a spouse's pot be big enough to use their personal allowance after retiring and before state pension kicks in though. £120,000 for example would be about right retiring at 60.
PistonHead007 said:
Personal circumstances dictate.
We both work but she pays the minimum to get the employer contributions and I put a lot more in.
For example, a basic rate taxpayer puts in £80 and gets £85 on the way out. As a higher earner you can at best put £38 in (effective cost compared to take home pay) and net £85 back out with basic rate in retirement, or £70 if higher rate in retirement.
Therefore, makes no sense to pay extra to make them even. There is some consideration for having a spouse's pot be big enough to use their personal allowance after retiring and before state pension kicks in though. £120,000 for example would be about right retiring at 60.
That was my logic with what I'm doing, I'm a higher rate taxpayer so make the most of the higher rate tax relief rather than trying to get her pension pot to match mine. We both work but she pays the minimum to get the employer contributions and I put a lot more in.
For example, a basic rate taxpayer puts in £80 and gets £85 on the way out. As a higher earner you can at best put £38 in (effective cost compared to take home pay) and net £85 back out with basic rate in retirement, or £70 if higher rate in retirement.
Therefore, makes no sense to pay extra to make them even. There is some consideration for having a spouse's pot be big enough to use their personal allowance after retiring and before state pension kicks in though. £120,000 for example would be about right retiring at 60.
She will have enough years to qualify for state pension and when she finishes training will start to accrue a DB pension anyway.
Anyway isn't the rule what's mine is ours, but what's hers is hers?
Josemartinez said:
My thought is if your married it doesn't matter who's pension pot is bigger and if we get divorced it will get split anyway. Not sure how this works for single parents though and they have it tough as it is.
My thoughts entirely. I view us as a team and we need to optimise household income both now and in the future. While both working, and both contributing to household income, it’s far more tax efficient for the wife to max her 20% allowance and for the husband to minimise their exposure to the higher bands by contributing to the pension. And any money the wife has left over can go into an ISA.
Of course there’s a complication if the amount the husband intends to take in retirement is significantly into the higher bands but it’s usually considered to be the band below.
If I die my wife gets the whole lot anyway, and if we divorce I’ve no doubt she’ll get half of it or more.
dingg said:
It's a non problem
Having children costs money accept that fact or don't have children..
Where's the debate?
I think the issue is more when man and wife then split up - the woman has given up her earnings as part of a joint decision to have kids then 20 years later she ends up on her own or with a new partner with a smaller pension while the man is doing very nicely thank you with no "penalties" for what was a decision made with his former wife.Having children costs money accept that fact or don't have children..
Where's the debate?
SunsetZed said:
I agree with pretty much all of what's been written but out of curiosity did the campaign group have a suggested solution?
Same I agree with pretty much everything said. I'm glad I hadn't misunderstood it. The group is called pregnant then screwed, they have a 24 page strategy document and as far as I can tell they don't do anything other than go on marches and "raise awareness".
They say that they were recognised for their role in the 30 hours funded childcare scheme but other than that it seems to be complaining that employers and the government don't pay them for the time they are looking after the children they decided to have.
Short answer is they don't have a solution
Edited by Josemartinez on Friday 16th October 13:02
Condi said:
I think the issue is more when man and wife then split up - the woman has given up her earnings as part of a joint decision to have kids then 20 years later she ends up on her own or with a new partner with a smaller pension while the man is doing very nicely thank you with no "penalties" for what was a decision made with his former wife.
As part of the divorce would she not get half his pension pot and childcare payments? Josemartinez said:
As part of the divorce would she not get half his pension pot and childcare payments?
For a state pension then no, she has to buy back the years she missed and (AIUI) there is no mechanism for her to get any of the mans state pension. Childcare is only until 18, beyond that no support.
Private pensions, doesn't it depend on what is agreed by the parties or by the family court judge if it goes there? When my parents split up they agreed between them how much she was going to get and simply notarised it with a lawyer.
Condi said:
For a state pension then no, she has to buy back the years she missed and (AIUI) there is no mechanism for her to get any of the mans state pension.
Childcare is only until 18, beyond that no support.
Private pensions, doesn't it depend on what is agreed by the parties or by the family court judge if it goes there? When my parents split up they agreed between them how much she was going to get and simply notarised it with a lawyer.
I think they changed the state pension and you do get the years for the period you receive child benefit. I set ours up in my wife's name to make sure she got the years whilst she was on maternity leave. Childcare is only until 18, beyond that no support.
Private pensions, doesn't it depend on what is agreed by the parties or by the family court judge if it goes there? When my parents split up they agreed between them how much she was going to get and simply notarised it with a lawyer.
Fair point re child support after 18.
Your right re private pensions and it's probably not something most people would think about when splitting assets unless it was a PH directors sized pension
On a slightly unrelated note my boss pays his ex wife £1000 a month to maintain her standard of living. They don't have kids or anything. This seems an odd arrangement, he's almost 60 and remarried a younger woman
dingg said:
It's a non problem
Having children costs money accept that fact or don't have children..
Where's the debate?
It's largely made up, like Ryanair's gender pay gap. Having children costs money accept that fact or don't have children..
Where's the debate?
Women get 12 months on full pay, men get 2 weeks at my workplace. Have 3 kids and get 7% of your working life off on full pay.
Seems grossly unfair to me but here we are.
alscar said:
My wife hasn t had paid employment since our last oldest was born 34 years ago and prior to that paid virtually no NI.
She has accumulated around 18 years of contributions thanks solely as you say to child benefit receipts and hence contribution.
At her nra she will therefore get around 50% of whatever I get having contributed the full 35 years worth.
Tbh I thought for her this was actually quite generous seeing as it was a free benefit ( and yes I know I paid tax on it ).
We benefited, but it seems somewhat odd to me that women who’ve had no income for many years suddenly start getting a pension.She has accumulated around 18 years of contributions thanks solely as you say to child benefit receipts and hence contribution.
At her nra she will therefore get around 50% of whatever I get having contributed the full 35 years worth.
Tbh I thought for her this was actually quite generous seeing as it was a free benefit ( and yes I know I paid tax on it ).
The thing that frustrates me in retirement is not being able to share our personal allowances. I’m not sure how me the maths works out but I’m wondering if we missed a trick not putting more into her SIPP.
Sheepshanks said:
alscar said:
My wife hasn t had paid employment since our last oldest was born 34 years ago and prior to that paid virtually no NI.
She has accumulated around 18 years of contributions thanks solely as you say to child benefit receipts and hence contribution.
At her nra she will therefore get around 50% of whatever I get having contributed the full 35 years worth.
Tbh I thought for her this was actually quite generous seeing as it was a free benefit ( and yes I know I paid tax on it ).
We benefited, but it seems somewhat odd to me that women who ve had no income for many years suddenly start getting a pension.She has accumulated around 18 years of contributions thanks solely as you say to child benefit receipts and hence contribution.
At her nra she will therefore get around 50% of whatever I get having contributed the full 35 years worth.
Tbh I thought for her this was actually quite generous seeing as it was a free benefit ( and yes I know I paid tax on it ).
The thing that frustrates me in retirement is not being able to share our personal allowances. I m not sure how me the maths works out but I m wondering if we missed a trick not putting more into her SIPP.
Edited by alscar on Friday 16th October 14:27
Sheepshanks said:
We benefited, but it seems somewhat odd to me that women who ve had no income for many years suddenly start getting a pension.
The thing that frustrates me in retirement is not being able to share our personal allowances. I m not sure how me the maths works out but I m wondering if we missed a trick not putting more into her SIPP.
I think your better off getting the higher rate tax relief now, although it will be frustrating paying higher rate tax on your pensions when your partner has unused 20% allowance. The thing that frustrates me in retirement is not being able to share our personal allowances. I m not sure how me the maths works out but I m wondering if we missed a trick not putting more into her SIPP.
Some countries I think it's Norway or somewhere around there allow you to file a joint tax return, which would be loads better but obviously reduce the tax income for the government.
alscar said:
I started a SIPP for her around 2015 with the basis £2,880 being added each year plus the 25% tax relief which today I think would pay around £8k pa as an annuity or 125% of her "missing" SP.
It must have been invested very well to have enough to pay £8K.My wife has around £65K in hers - not touched it yet but we are being advised to empty it as the SIPP costs are disproportionately high.
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