Here’s how to kill a conversation with a woman of a certain age. Mention pensions. They will either yawn with boredom or shrink with terror.
But frankly a pension is far more useful and exciting than a ghastly overpriced handbag. Indeed, I’d go as far as to say that pensions are really quite interesting and are certainly a bit of a must-have bargain. Which is more than you can say for a designer bag.
Yet nearly a quarter of women over 55 who own their own homes don’t have pensions according to Sun Life. Many of these women will be relying on their partners for income in retirement. Some might be hoping they will get a full state pension and can live off that.
But you only get a full state pension if you’ve got at least 35 years of National Insurance contributions. And even then, the state pension is currently £168.60 a week: not a fortune. You should check when you’ll get your state pension and how much you’re in line for at www.gov.uk.
And while I hope this never happens to you, life has a way of throwing things at you which can throw you off course: marriages and partnerships sadly don’t always last for ever. Illness and disability can scupper plans too.
So how much better would it be to have your own pension rather than rely on others? And here’s the big, klaxon-blaring advantage: FREE MONEY. How often does the government actually give you money? If you put money into a pension then you get lovely tax relief on your contributions. This has the effect that, if you’re a basic or non-taxpayer, it costs you £80 to put £100 in a pension. You also don’t even need to be a taxpayer: non-taxpayers (including children) can put away £2,880, boosted to £3,600 with tax relief, in a tax year.
If you’re working, then your first pension choice should be your employer’s scheme, as then you’ll get contributions from them too. If you’re self-employed or not working then go it alone and sort out your own personal pension. The best and cheapest option is probably a Sipp (self-invested personal pension) – you can then choose what investments you put into it. Have a look at Jane’s choice of funds for this year’s Isa (the principle is the same as with Sipps, it’s just the framework which is different). You could also opt for ultra-cheap trackers which slavishly follow the stock market. But whatever you do, think pensions: there’s nothing fun about being poor when you are old. So do something about it now. And see our guides to pensions too for more help.