Five things that you can do to protect your pension, as a woman

by | Sep 23, 2021 | Articles, Wellbeing

Sponsored by Penfold

With Pension Awareness Week just behind us, you’re hopefully feeling a little more engaged with your pension than you were before – but the awareness must continue if women are to achieve pension equality. It’s apparent that some legal, systemic, and attitude changes are needed, but there are also some things that we can be doing on an individual level to protect our interests and make sure that we’re protecting our wellbeing when we reach retirement age. 

We caught up with jargon and hassle-free pension provider, Penfold, to talk about what we can do as women to protect our pensions and flourish, rather than flounder, when we stop working:

Don’t be afraid of risk, especially early in your working life

Research from Penfold shows that, when it comes to pension risk level, women generally opt for low or medium risk when compared to men – for example, Penfold’s highest risk level fund is made up of 70% men vs 30% women. When it comes to your money, it’s totally normal to be risk-averse, and to want to be cautious about your future, but with pension savings invested over such a long period of time, a tiered approach can be really beneficial. Choosing higher-risk funds earlier in your working life in order to increase your potential for higher returns, and rolling down to medium- and then lower-risk funds as you approach retirement age could be a good strategy for mitigating risk while maximising growth. Always choose a level of risk that you’re comfortable with, but make sure that you’re not squashing your pension’s growth due to over-analysis.

Taking maternity leave, a career break or going part-time? Make sure your pension is covered

Despite a provision for shared parental leave in the U.K., uptake is still very low, and time taken out of the workplace to care for babies and children is still heavily weighted towards women. This means that parental leave, part-time working and career breaks for the purpose of child-rearing are almost exclusively taken by women, leaving them with lower or non-existent income for this period of time which, of course, knocks on to their pensions, too. Working fewer hours, working across more than one job to accommodate childcare and being paid less can all contribute to women being ineligible for auto-enrolment and employer pension contributions, while taking a break can cease pension contributions altogether. 

We’re often advised to consider and discuss finances when planning and starting a family, but it’s important to note that this should be extended to your pension, too – getting a private pension and contributing even small amounts during periods of reduced hours or working as a full-time parent can make a huge difference to your pension pot. 

Embrace sustainable pension investing

Women are more likely to invest sustainably across the board, including choosing green or sustainable pension funds, and this is absolutely something to be embraced. Investing your pension in a sustainable fund that aligns to your personal values and contributes to protecting human rights and the environment rather than funding arms, tobacco and fossil fuels, is one of the biggest ways that you can do your bit for the future of the planet and humanity. It’s been proven to be more effective than never flying, or giving up meat. We’ve got our pensions in Penfold’s sustainable fund, and couldn’t be happier.

Change the way you think about your pension

Pensions have long held the reputation of being a boring necessity that exists only to fund your ‘old age’, but that’s not necessarily true. If you want to retire early, or have plans to travel following your retirement, these can be things that you can get really excited about. Think of your pension as an investment in your future, and a way to buy yourself some time and peace of mind when you’re a little older.

Remember that it’s never too early, or too late 

With pensions, it seems that most people think it’s too early to start thinking about them, until one day they wake up and panic that it’s too late. But this absolutely doesn’t have to be the case. In your twenties, making sure that you’re contributing to your workplace pension scheme, and having an awareness about the details of your pension – especially risk level and what type of funds it’s invested in – may be enough for your peace of mind. As you reach your thirties, contributing a little more to your pension might help you to feel secure, whereas in your forties it may move a little further up your priority list. The earlier you begin investing in your pension, the less you will need to put in overall to get a decent pension pot, but it’s never too late to get started and see your money grow. 

Penfold, our partner for this post, pride themselves on providing a simple, flexible pension that you can keep tabs on through an easy-to-use app. Your Penfold pension takes less than five minutes to set up, and you can get a £25 introductory bonus when you sign up here getpenfold.com/refer/myfrugalyear before 26th September 2021.

Please be aware that these tips do not constitute financial advice, and are intended to provide some initial insight only. 

With investing in a pension, your capital is at risk.