New figures show that almost half (46%) of women do not think they have saved enough in their pension fund for retirement, while men are much more confident about their savings in later life, with only a third (35% ) are concerned that they have not allocated enough money.
New research from fintech on workplace pensions and savings Cushion, carried out as part of the new white paper, comes at a time when the value of money in pensions is being questioned, with the UK government recently consulting on the issue and its findings due to be published later this year. In its new white paper, Cushon calls on the UK government and industry to start listening to employees to drive pension engagement and ultimately deliver better value for money.
As a result of the ongoing cost of living crisis, more than one in four (26%) large businesses are reporting an increase in the number of employees withdrawing from workplace pensions, with numbers expected to rise.
Interestingly, almost a third (30%) of female employees want higher contributions to help them save for the future during the cost of living crisis, while almost all women (92%) agree that contributions of the employer are important.
Employers have a role to play in driving value for money by not only increasing their contribution rates but also making pensions more inclusive and accessible to all. If employees do not believe their pension offers value for money, there is still a risk that they will opt out or reduce savings, which could affect their financial situation in retirement.
Steve Watson, director of policy and research at Cushon, said: “It is extremely worrying that such a clear gender gap in pensions continues to exist. The research is clear – women understand that a huge factor in the value of their retirement fund ultimately comes down to how much they contribute. That’s why so many people are calling on their employers to increase their pension contribution levels.’
Workplace and private pensions will help bolster the State Pension in retirement, but many people may rely on contributory allowance as their only income in retirement. However, the State Pension is not paid automatically and how much someone gets depends on how many years they have paid into National Insurance before reaching the retirement age, which is currently 66 for men and women.
The state pension age is due to rise to 67 between 2026 and 2028. A further planned rise to 68 is due in the mid-2040s. The UK government will review this rise two years after the next general election – expected to held the following year.
The State Pension currently provides essential financial support to 12.6 million older people across the country, including more than one million pensioners living in Scotland. Along with any private or workplace pensions, a top-up can provide much-needed income in later life.
Below is our handy guide to understanding how National Insurance contributions affect the amount of State Pension you’ll receive in retirement and how many years you may need to work to qualify for each payment and the full payment – now worth £203.85 each week.
How to get a new State Pension payment
You will need at least 10 qualifying years on your National Insurance record to qualify any kind State pension, but they do not have to be 10 consecutive years.
This means that for 10 years at least one or more of the following applies to you:
- you worked and paid insurance
- you received National Insurance credits, for example if you were unemployed, ill, a parent or carer
- you have paid voluntary insurance contributions
If you have lived or worked abroad, you may still be able to get a new state pension.
You may also be eligible if you’ve been paying contributions at a reduced rate for married women or widows – find out more at GOV.UK website here.
How to get full payments on a new state pension
You will need it 35 qualifying years to get the full new state pension if you didn’t have a national insurance record before 6 April 2016.
For people who have provided between 10 and 35 years, they are entitled to part of the new state pension.
Qualifying years if working
When you work, you pay National Insurance and get a qualifying year if:
You may not pay National Insurance contributions because you earn less than £242 a week. You may still get a qualifying year if you earn between £123 and £242 a week from one employer – find out more here.
Qualifying years if not working
You can get National Insurance credits if you are unable to work – for example because of illness or disability, or if you are a carer or unemployed.
You can get National Insurance credits if:
- claim child benefit for a child under 12 (or under 16 before 2010)
- you receive Jobseeker’s Allowance or Employment and Support Allowance
- receive Carer’s Allowance
If you are not working or receiving national insurance credits
You may be able to pay voluntary National Insurance contributions if you are not in one of these groups but want to increase your State Pension. Learn more at GOV.UK website here.
Latest news on state pensions
What if there are gaps in your National Insurance record?
You can have gaps in your NI record and you still get the full new state pension. You can get a State pension declaration which will tell you how much State Pension you can get. You can then apply for a National Insurance Statement from HM Revenue and Customs (HMRC) to check your record for gaps.
If you have gaps in your National Insurance record that would prevent you from receiving the full new State Pension, you may be able to:
Check your National Insurance record on GOV.UK here.
Check your state pension age
Check your state pension age to find out when you can retire and claim a state pension using GOV.UK’s free online tool here.
This will tell you:
- when you reach state pension age
- your pension credit age
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