Part-time work, lower pay, and time out of the workforce are key contributors to the gender pension gap.

Women might start their careers just as likely to contribute to a pension as their male colleagues, but over time, these factors can derail women’s retirement planning.

If you’re worried about your retirement, here are some tips to help you navigate your pension.

This isn’t personal advice. If you’re not sure what’s right for you, ask for financial advice. Pension and tax rules can change, and benefits depend on your circumstances. You also can’t usually take money out of a personal pension until at least 55 (rising to 57 from 2028). Investments will rise and fall in value, so you could get back less than you invest.

The government’s free and impartial Pension Wise service can help those aged 50 or over understand what type of pension they have, how to access their savings and the potential tax implications of each option.

You can call Pension Wise directly on 0800 100 166 or make a booking online.

What’s the problem?

In 2019/2020, the gender pension gap stood at 37.9% – much higher than the gender pay gap which was estimated around 15.5%.

An increase in flexible working has proved popular during the pandemic and continues to be vital in helping women balance their career with their caring responsibilities. This means more women are able to work, and in doing so, increase their pension contributions.

However, as many of us return to the office, it remains to be seen how many employers will keep these flexible arrangements in place over the long term.

Revised working practices will be key in helping women build bigger pensions, but there are other things you can do to boost your contributions. Over time, even relatively small actions can have a big impact on how much you end up with in retirement.

Make auto enrolment your pension life hack

The first thing to think about is how you can increase your pension contributions over time. Under auto-enrolment, the minimum contribution is currently 8% on relevant earnings and many, though not all, workplace pension schemes are set up at these levels.

This is typically made up of 5% from the employee and 3% from the employer. It’s a good start, but for many people, 8% alone won’t be enough to generate a decent income in retirement. Especially if you’ve had to take a career break for any reason.

A good way of boosting your contributions is to try to commit to increasing your pension contribution beyond any new salary adjustments every time you get a pay increase or a new job.

Prices are rising and budgets are being squeezed, so this should only be an option if you can afford to.

But if you can, it’s a good way of increasing how much you pay in and get when you retire. That’s because you’re taking the increased contribution from money you’re not used to spending, rather than having to make cuts to your current budget to afford the extra contributions.

You’ll get a top up from the government on any extra money you pay in through tax relief – as long as you haven’t breached your annual allowance. This is the maximum you can contribute to your pension every year and still receive tax relief. For most people, it’s £40,000. Over time, this could really boost the amount you put into your pension pot.

Pension annual allowance pitfalls – how to navigate them

Employer match and salary sacrifice

Another potential way of boosting your contributions is to see if your employer is willing to boost their contribution if you increase yours.

Lots of employers stick with auto-enrolment minimums, but there are others who offer what’s called an employer match – this means they’ll match your contribution up to a certain level. Let’s say you boost your contribution to 6%, they might do the same. This can be a great way of getting a real hike in the total being added in, for a relatively small uplift in your own.

Some employers will highlight they offer an employer match as it can be a real plus when it comes to recruiting and retaining people. However, not all employers communicate this widely. It’s worth asking your employer if they match extra payments. If they do, and you can afford it, it’s worth making the most of it.

It’s also worth checking to see if your workplace pension is set up as a salary sacrifice arrangement. These are popular arrangements where you agree to reduce your salary by an amount equal to the amount you want to contribute to your pension. In return, the employer pays that amount into your pension.

Because you’re being paid less, you pay less income tax and National Insurance, so you keep more of your take home pay. But you’ve maintained your pension contribution at the same level. This can be a good way of maintaining or even boosting your contributions.

There’s a long way to go to close the gender pension gap and wider workplace reform will probably be needed. However, it’s worth checking to see if you can benefit from any of these hidden boosts to set you on the right track to building a more financially resilient retirement.

4 ways to boost your State Pension and retirement income

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