Pensions are for girls

Harvey Jones explains why women need to wise up about pensions

There are plenty of things that women can easily do without. Men, for starters. Beauty magazines that make them hate their own bodies. A new pap shot of Posh Spice negotiating airport security every day of the week. Cath Kidston hand towels (they only put the flower print on one side, cheapskates!).

But there is one thing that women cannot do without: a pension.

Yet strangely, many women think they can pass through life blissfully unaccompanied by that practical accessory.

An annuity is for life, a man isn't.

Lippy, eyeliner, cotton buds? Check. A tissue in every sleeve, pocket and flap of my handbag? Check. A wardrobe full of shoes I never wear? Check. Useless lump of a boyfriend? Check.

A pension that will support me in retirement, even if my useless lump of a boyfriend sleeps with my best friend and I end up chasing him around the kitchen with a bread knife?

Nah, that can wait.

Women beware women

Women have been battling for equality for years, but they still have a long way to go. They still earn less than men for doing the same job, while some males are still strangers to housework.

It isn't fair. No, really.

In most cases, women can dump the blame on men, but when it comes to pensions they have to look to themselves.

Too many are unconsciously clinging onto the outdated notion that when they finally hang up their heels, the man in their life will lead them gently to his pension plan and say: "Darling, this is all yours."

Which is a dangerous assumption to make, given the unreliability of men, and the equally dismal level of their financial planning skills.

Sisters aren't doin' it for themselves

When Annie Lennox and Aretha Franklin declared that sisters were doin' it for themselves, they made the valid point that "we got doctors, lawyers, politicians too, ooh ooh ooh, ooh".

They said nothing about pensions.

The lyrics to the Destiny's Child hit Independent Women diligently list everything the girls buy for themselves, including "the shoes on their feet (I've bought it), the clothes I'm wearing (I've bought it), the house I live in (I've bought it)".

Again, no mention of pensions.

All the mommas who profit dollars really should be giving serious thought as to where they invest them.

Low pay, low pension

Women get a raw deal on pensions. Only a third get the full basic state pension, according to the Pensions Advisory Service. That's because many women work in low paid part-time jobs and don't earn enough to make the necessary National Insurance (NI) contributions.

Here's some tips on how to boost your state pension entitlement: How women can boost their pensions.

The Government has tried to solve the problem with new rules which took effect in this year. Now, both men and women will only need to have made NI contributions for 30 years, down from 44 years and 39 years respectively at the moment. Carers, mostly women, will also start earning credits towards a pension.

Pension minister Angela Eagle claims the reforms will see 75% of women start to get the full basic state pension.

Let's hope so.

Girls need pensions too!

Here's another reason why you can't rely on a man. One in 10 marriages ends in divorce within five years, and almost half of all married couples end up going their separate ways.

In a split, women typically fail to consider the value of future pension income when reaching a settlement, says Hannah Edwards at stockbroker Killik & Co. "It is quite common for women to be less interested in a pension split for their share of the assets while the husband typically will try to keep his full pension benefits in the settlement. This can end up being a costly mistake for women."

So watch out sisters. Men know the value of their pension pots, make sure you do as well.

Eight years' extra work!

Women will no longer have the advantage over men of being able to retire earlier at the age of 60. From this year up to 2020, State Pension age will steadily increase to age 65, in line with men. So, that means in a decade's time State Pension age will be 65 for both men and women.

Under previous Labour plans, the state retirement age was set to gradually rise between 2024 and 2046, to age 68.

But the coalition has said this isn't ambitious enough, and have announced plans to raise the retirement age to 66 by 2016, with further rises up to 68 being brought forward.

Critics have pointed out that this could hit some women really hard, because the retirement age will rise rapidly over a comparatively short space of time.

The honeys are makin' money... so start investing

The average woman has more than £7,000 worth of clothes in their wardrobe, according to insurer LV=. That money would be better off in your pension pot.

I know times are hard, but unless you are on a low income or benefits, you really should be saving at least something for your future, either in a company or personal pension, or tax-efficient Isa.

Follow that advice, and one day you can boast, like the Independent Woman you are: "I depend on me."

This is a lovemoney.com classic article which has been updated for 2010.

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