January 16, 2025 • 37 mins
In this episode of MyFamily Pod, Jane Tenquist, Head of Family Law at Myerson Solicitors, speaks with Sally Beresford, a financial planner at Evelyn Partners. Together, they explore the critical issue of why women often retire with significantly smaller pensions than men and discuss practical steps to ensure financial security during and after divorce.
🎙️ Key topics include:
- The gender pension gap and why it exists.
- The importance of pension sharing during divorce.
- How cash flow modelling helps with financial planning.
- Steps women can take to boost their pension pot.
Don't miss this insightful conversation packed with expert advice for those navigating divorce and financial settlements.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
UNKNOWN (00:00):
Bye.
SPEAKER_00 (00:18):
Hello, welcome to my family podcast.
I'm Jane Tenquist.
I'm head of the family team atMyerson and I specialize in
financial remedies on divorce.
I'm here today with SallyBeresford, who is a financial
planner from Evelyn and Partnersin Manchester.
(00:39):
Sally specializes in helpingclients on divorce implement
their pension sharing orders andrestructuring and rebuilding
their wealth post divorce.
The topics we're going todiscuss today are why is it that
women are so underpensioned?
Why is their pension so muchlower than men's in general?
(01:20):
Welcome Sally for joining ustoday.
We're going to talk about why isit that women in general have
far less pension to men.
As a family lawyer I've noticedthis feature during my work
dealing with pensions on divorceand I was wondering why from
your point of view as afinancial planner who advises
(01:43):
people on implementation ofpension sharing orders, whether
you've also noticed thisfeature?
Yes, Jane, you're absolutelyright.
We see this a lot.
I mean, most people have heardof the gender pay gap, but there
absolutely is a gender pensionsgap as well.
And there's lots of researchinto what that means, what the
differences are, why that is thecase.
(02:06):
The Department of Work andPensions published a paper in
2022 which looked at the valueof men's and women's private
pension savings that weren't yetin payment at age 55 that said
that they found that men havearound 35% more pension value
than women that had gone down sothe stats were kind of getting
(02:28):
better for women from theprevious survey and paper and
And Charles Stanley have quoteda stat which shows that women
retire on average with a pensionpot valued at£69,000.
It's really low, isn't it?
Yeah.
So that's a difference of nearly£137,000.
So we see this a lot.
(02:52):
And it's a constant issue in thetype of advice that we are
providing in terms of womenhaving more pension savings.
There's another stat that saysthat by 2026, 60% of the UK's
wealth will be in the hands ofwomen.
So whether that's actuallypension fund values or whether
(03:12):
that means kind of the controlof the family finances, I'm not
quite sure.
And why do you think that isthat women have far less
pension?
and we've gone through thestatistics, but why do you think
that women have far less pensionthan men?
There's a variety of reasons.
(03:32):
I mean, in general, there areless women in work than men,
less women are employed.
The women that are employed...
do tend to be paid less.
We see that through the genderpay gap studies.
Legal in general have said thatby the age of 27, a woman is
already earning on average10,000 pounds a year less than a
(03:54):
man.
So that then translates into thepension contributions.
You might be paying the samepercentage, but your salary is
lower.
So in monetary terms, thatcontribution is less.
More women do tend to workpart-time or in a temporary
position than a man might do andtherefore their annual pay is
generally lower because they'reworking less hours or less days.
(04:16):
And that has an impact then onauto enrolment.
The government obviouslyintroduced auto enrolment to try
and encourage everybody tocontribute to a pension.
But there are certain parameterson when you are auto enrolled or
not.
So you're not automaticallyenrolled into a pension if you
earn less than£10,000.
(04:37):
So if you're a lady in apart-time job and your salary is
less than£10,000, you're notgoing to automatically get added
to a pension scheme.
You can ask to get added to itif you earn over£6,000-ish and
your employer then contributes.
But I think because you wouldn'tautomatically be auto-enrolled,
you probably just ignore it andcarry on and don't think about
(05:00):
your pension.
And then there's kind of moreobvious things like there's the
career interruptions.
women going on maternity leave,choosing to stay off work and
not returning to work.
So the pain reduces during theperiod of maternity leave, might
come to a complete stop.
They may have a career breakrather, staying at home looking
(05:21):
after the children and might notreturn to work.
And they're just not thinkingthen about the pension
contribution.
The husband perhaps is still inwork, still contributing to his
pension, but they're notthinking of the finances as a
kind of a household budget.
the man's got his pensioncontribution going out
automatically through his paybut they're not thinking of i
(05:42):
should also be paying into apension i should also try and
keep those contributions goingas a divorce lawyer i i find
that pensions are a topic thatlots of people don't understand
and um Some women in particularare very focused on what's going
(06:06):
to happen in the immediate termand they want to rehouse
themselves in a house andpension is of secondary
importance.
But quite often the pension ismore valuable than the equity in
the matrimonial home.
And I often advise people to goand get some advice from a
pension financial planner orfrom a pension actuary on
(06:30):
divorce to give them options inrelation to pension sharing and
their best options really andsometimes people are reluctant
to invest in that sort of advicebut I think that divorce is the
most expensive and the biggestfinancial decision that you'll
(06:54):
ever make during the course ofyour life and it's important in
respect of pensions inparticular, that you get the
right sort of advice.
So in relation to pensions, canyou sort of explain, Sally, the
valuation of whether the valueof a pension is based on the
(07:14):
CEV, the cash and equivalentvalue of the pension or not?
Well, I suppose just to cover,there are two kind of main types
of pensions.
One where we're looking at thetime of divorce and we're
looking for the cash equivalentvalues.
You'd be referring there mostlyto a defined benefit or final
(07:37):
salary pension scheme.
Whereby that pension scheme hasa known future value.
So for the member of the pensionscheme, there's a formula that's
calculated that says based onyour length of service, your
salary and the accrual rate, wecan tell you at retirement age,
this will be the pension thatyou built up.
(07:58):
And that's where that cashequivalent value is needed.
At the time of divorce, the cashequivalent value is looking at
what would it cost the scheme toprovide those benefits to that
member.
The other type of pension schemeis the defined contribution
scheme.
So the defined contributionscheme are now more popular.
That's the type of scheme thatyou would be auto enrolled into
(08:19):
if you were in a workplacepension.
And that is quitestraightforward.
The value is what it says onthat statement.
It's that monetary pot amount.
But the difference with thattype of scheme is you know what
you contribute in, you know whatyour employer contributes, but
you don't know the futurebenefit.
There is no guarantee of whatcomes out of that pension.
(08:42):
But from a valuation point ofview, it's very straightforward.
It's just what the statementsays.
Now, the cash equivalent valueon a defined benefit or a final
salary scheme needs an actuarialcalculation.
And scheme by scheme will bedifferent.
The assumptions made oninvestment returns or interest
rates, for example, may bedifferent per scheme.
(09:05):
So you might find that, forexample, if one person has got a
guaranteed future pension of£10,000 in one scheme, that
might have a value.
I'm just picking figures now of£300,000.
But another scheme also mightprovide a pension of£10,000 per
annum.
But that cash equivalent valuemight be different.
£200,000 because the scheme willbe doing the valuation slightly
(09:28):
differently based on that schemeassumptions.
What's really important is tounderstand that if there is a
pension sharing order of adefined benefit scheme, a lot of
defined benefit schemes don'tallow a share of pension to an
(09:51):
ex-spouse to remain within thatpension scheme.
they will say you have to takewhat's called an external
pension credit and find a homefor this value of pension that
you've been awarded.
Let's say it's 25% of the schemecash equivalent value.
So you've got to be really awarethat you're giving up that known
(10:13):
guaranteed pension promise andyou're taking your pension
credit into, probably, a definedcontribution scheme.
And you've then got to look at,well, what will this capital
amount of pension fund valueprovide me with in the future?
And that's really where youneed...
Advice, financial advice,because as financial planners,
(10:34):
we can understand thecomplexities of the scheme.
We can understand the differentoptions.
Let's say when you are in adefined contribution scheme in
terms of drawing down an income,can you take some tax free cash
or not?
At what age are you going to beable to do this?
What are the tax rules onstructuring that income for you?
So just going back to what yousaid earlier, the financial
(10:56):
planning element of advice isreally crucial.
Because we could save thousandsand thousands of pounds.
We can help you even understandand negotiate a better financial
settlement and get the pensionsshared in the best way, into the
best new scheme, implement itcorrectly, and then the income
(11:18):
and the benefits set up in thebest way.
So sometimes when clients cometo see me, they...
I'm really not interested inpension because my priority is
to find a house for themselvesand their children.
And they just simply don'tunderstand pensions or they're
just not interested in having apension sharing order because
(11:41):
they feel morally that's theirpriority.
husband's asset and not theirsand they don't want to ignore to
annoy their husband by bytouching touching the pension
because you know that's his sortof um uh he he doesn't want to
negotiate on pensions why whywhy would what what are the
(12:03):
dangers of ignoring pensions ondivorce and what advice would
you give give to those peoplesally Yeah, I would say I do.
I completely understand whysomebody might say that.
That emotional aspect, isn't it,of I just want the security, the
comfort of the home, providingthe home for the children, for
example.
(12:23):
And you're absolutely right.
I think there is just a lack ofunderstanding of what pensions
mean, what they do, how they canprovide for you.
Again, there's more stats on,you know, legal in general have
said 33% of women don'tunderstand pensions and they are
less likely to have been engagedwith a financial planner.
(12:43):
They're less likely to have anISA, stocks and shares ISA, less
likely to have a pension.
So I think as a financialplanner, we can help initially,
again, just with that educationof the value of a pension.
Yeah.
Women live longer than men.
The average life expectancy of awoman is much longer.
(13:04):
It's roughly age 82 and a man's78.
So I think for the long termfinancial security, although it
might give somebody comfortinitially to have secured the
family home, they really do needto think of, well, how am I
going to provide myself with anincome?
in the future and that's wherethose cash flow modelling tools
can come in and help justdemonstrate in a nice colourful
(13:27):
chart that actually meanssomething where we can look at
figures up to somebody's 100thbirthday.
Can you explain a little bitabout cash flow modelling and
how that works then?
Yeah, so cash flow modelling isreally just a very sophisticated
(13:50):
tool.
The better the information weput in, the better the output
is.
But essentially, we feed intothis tool a client's income,
expenditure, assets, debts, forexample, and we can plot for
every age what that income andoutgoings might look like and
what a client's overall assetvalue looks like as well and how
(14:12):
it's made up.
So what are the sources ofincome?
What is the expenditure?
What makes up the assets?
Is it cash?
Is it investments?
Is it pension?
Is it property?
And we can use the tool to modeldifferent scenarios.
So in the case of divorce andlooking at financial
settlements, we can actuallysay, what would it actually mean
in this case where you're beingtold that you could have a
(14:36):
settlement of X amount ofhundreds of thousands of pounds
or X Or you take the family homeinstead of that.
And a maintenance payment of Xamount a month for so many
years.
What does it actually look likein real terms?
Are you going to be able tosupport yourself?
Is it what you need?
(14:56):
When might it run out?
When might you see someshortfalls?
Or actually, does it all looksuitable?
And you are going to be able tomeet your needs.
Because numbers on a spreadsheetreally don't mean anything.
But the numbers within a toolthat allow you to see your
financial future actually meansomething.
And we can use this tool satwith you and a client around the
(15:19):
table to say, let's just have alook if the financial settlement
was structured in a differentway.
So if you had an initial...
larger bits of capital andsmaller maintenance payments or
larger maintenance payments andsmaller capital, or you had this
percentage of a pension or thispercentage of a pension, what
does it actually mean in termsof the value of your assets over
(15:41):
your lifetime and the ability touse those assets to give you the
income that you need?
So that really emphasises,doesn't it, the importance of
getting a financial plannerearlier on within the divorce
process so that you've got timeto think about how much of a
lump sum do I need in order toprovide for my lifestyle for X
(16:04):
number of years and when's themoney going to run out?
And it's important to sort ofhave all that information to be
able to make the right decisionsin relation to...
pension pots isn't it and andlump sums on divorce really and
just because just because youyou're wanting the house doesn't
mean that you can't have thepension but quite often people
(16:27):
will just say well we've decidedwe're going to split the housing
we're going to keep our pensionsto ourselves and but there may
be an enormous disparity betweenthe their respective pension
parts that's it and you can'treally see it can you you might
see a figure on a page but whenyou can actually plug the
figures through a tool and seewhat that looks like I always
(16:49):
say it gives clarity andhopefully comfort and if it
doesn't give comfort then weknow the steps that we need to
make Yeah.
Yeah.
Yeah.
Yeah.
(17:18):
What's the income going to looklike?
What are the underlying assets?
What assets will you be leftwith at the end of your
lifetime?
Obviously, there are someassumptions in there for things
like inflation or interest ratesor the investment return, but we
make sure that it's specific tothat client.
So, for example, if it's a ladywho's got no investment
experiences, a bit nervous, it'snot appropriate to assume that
(17:42):
her invested assets or thepension share that she's going
to receive and then be invested.
would be invested at a highlevel of risk we're not going to
plug into the tool that shereceives a seven percent a year
return we're going to put intothe tool a more realistic
investment return of threepercent a year for example you
know it's really tailoredspecifically to that individual
(18:04):
yeah those women have differentum investment approaches don't
they in terms of their riskprofile generally compared to
men it's back to that same thingisn't it of the knowledge and
the education and the comfort ofunderstanding finances and
because women live longer thanmen it would make sense that you
(18:26):
do have a pension entitlement touse in the future if you don't
take any of the pension and youhave the family home, at some
point you're going to have tosell that home, aren't you?
And you're going to have toreinvest the proceeds somehow to
buy a smaller house, let's say,and then reinvest that money.
But the cash flow tools can alsohelp look at the tax position as
(18:48):
well at different points inlife.
So what's the most tax efficientway for you to receive a
settlement?
What does that look like in thefuture?
I think people perhapsunderestimate what their
retirement cost might be.
how much might they spend sothere's a body called well it's
(19:08):
the retirement living standardsreport looks at each year what
level of income you would needto have either a minimum or
moderate or a comfortablelifestyle and they include
within that things like thetypes of holidays that you may
take or how often you mightholiday and you know is it Is it
overseas or is it in the UK?
And how much would you spend onbirthdays and Christmases?
(19:30):
Or how often do you change yourcar and make gifts to charity
and things like that?
But they say that a minimumsingle person lifestyle is
£14,500 a year.
Moderate is£31,300 a year.
And a comfortable lifestyle is£43,100.
So I kind of refer to thatreport as a way to say...
(19:55):
What kind of lifestyle would youexpect to have?
And most people certainly wantcomfortable.
When clients come to see me, I'mreally not interested in pension
because their priority is tofind a house for themselves and
their children.
And they just simply don'tunderstand pensions or they're
just not interested in having apension sharing order because
(20:15):
they feel morally that's theirpriority.
husband's asset and not theirsand they don't want to ignore to
annoy their husband by bytouching touching the pension
what are the dangers of ignoringpensions on divorce and what
advice would you give yeah iwould say i do i completely
understand why somebody mightsay that that is that emotional
(20:37):
aspect isn't it of i just wantthe security the comfort of the
home providing the home for thechildren for example um and
you're absolutely right I thinkthere is just a lack of
understanding of what pensionsmean, what they do, how they can
provide for you.
Again, there's more stats on,you know, legal in general have
(20:57):
said 33% of women don'tunderstand pensions and they are
less likely to have been engagedwith a financial planner.
They're less likely to have anISA, stocks and shares ISA, less
likely to have a pension.
So I think as a financialplanner, we can help initially,
again, just with that educationof the value of pensions a
pension um and women live longerthan men the average life
(21:22):
expectancy of a woman is muchlonger it's you know roughly age
82 and a man's 78 so I think forthe long-term financial security
although it might give somebodycomfort initially to have
secured the family home theyreally do need to think of well
how am I going to provide myselfwith an income in the future and
(21:43):
that's where those cash flowmodelling tools can come in and
help just demonstrate in a nicecolourful chart that actually
means something where we canlook at figures up to somebody's
100th birthday.
I quite often use financialplanners during the course of
divorce proceedings to assistwith helping in formulating the
(22:06):
joint letter of instruction tothe pension actuary or in um,
raising questions after thepension report has come in or
deciphering the reports becausesometimes they're very complex
documents and it helps to have afinancial planner to explain the
(22:27):
jargon sometimes and what thatmeans, especially if there are
lifetime allowance issues orcrystallised and uncrystallised
benefits, to understand theterminology.
So it's really important to havea financial planner to assist
you going through divorce andalso in relation to implementing
pensions post-divorce and makingsure that you put your pension
(22:51):
credit into the right scheme andthat it will...
you know, generate the incomethat you need from it.
So it's really important to getthe right type of advice.
As you said, we can help atthose early stages.
As a financial planner, I'm sureI'm right in saying all
financial planners would like tobe involved in that process as
(23:13):
early as possible.
we can help with the modelingtools that we use.
So the cashflow planning, we canhelp look at what that
individual's financial futuremay look like based on different
settlements, a different shareof pension, what that actually
means in real terms, because aclient quite often is completely
(23:37):
bamboozled by numbers on aspreadsheet.
They don't really mean anything,but when you put it into that
cashflow modeling tool andproject forward, what the
financial position looks like,it really does actually need
something and can help you makethose informed decisions.
Working with a client goingthrough divorce at a very early
stage, particularly as you saidearlier, sometimes it is the
(24:00):
female who may not have beeninvolved in the family finances,
doesn't know the detail of them,doesn't understand what a
pension is or an ISA is.
We can help really early on withjust that financial education,
the comfort, providing them withmore knowledge.
And obviously, you know,knowledge is power, allowing
them to feel in a more powerfulposition to say, I understand
(24:21):
this.
I can see now what this means tome in the future.
And I can now make a much betterinformed decision.
I know I'm often asked byclients when we're going through
the divorce procedure you knowif you've got a pension pot why
can't we just divide it in twoand not get a pension actually
(24:45):
involved but sometimesarithmetically dividing it in
two may not actually mean thatboth of the parties have equal
pension in retirement and it'sIt's important that we get a
financial planner involved atthat stage too so that the
(25:07):
clients understand the differentbenefits involved and that
equality of capital may not meanequality of income.
And it's important that we askthe right questions to the
pension actuary at the stagewhen we're instructing how to
(25:28):
equalise pensions, whether...
equalized pensions meaning justcut everything down the middle
or does it mean what sort ofpension would we have if we
retired at age 60 and would thatmean exactly equal pension
sharing or would it mean analternative percentage and
(25:51):
sometimes people struggle tograsp that you know about
equality of income and equalityof capital Yeah, absolutely.
And as you said earlier, afinancial planner can help you
draft that letter of instructionto make sure that you're going
to get the most from it.
You know, not to ask for lots ofdifferent retirement ages on
(26:13):
lots of different alternatives.
Because as you said, the reportsare complex.
They are long.
So you want to make sure thatyou're asking for the right
information.
questions initially to get theright outcome that it actually
means something it will savecosts and it will save time and
most actuaries or pension ondivorce experts the people that
are actually going to writethose reports i think are quite
(26:36):
happy for you to pick up thephone to them as well and say
can i just talk you through thiscase what should i be looking
for can you give me a Quiteoften I'm asked by clients,
especially if they've built uppension prior to marriage and
(26:59):
they have a decent pension potprior to marriage and then they
get married and then themarriage breaks down, that,
well, that's my pension.
I paid into it.
That's mine.
I don't want my ex-spouse tohave a share in that.
She can have a share of thehouse, but not the pension.
(27:20):
And sometimes it's verydifficult to explain to people
that sometimes it is possible toprotect your pension if you're
marrying later on in life by wayof a prenuptial agreement.
But in a long marriage, it isquite difficult to succeed on
(27:41):
arguments in relation to ringfencing, pensions acquired prior
to marriage if there's been along marriage afterwards yeah
you're absolutely right and thepension advisory group that
published the first paper in2019 have published a second
paper this year and that the PAGpension advisory group report is
(28:06):
really clear it emphasizes thatfor needs cases that there
shouldn't be any assets, shouldnot be ring-fenced.
And it's very clear on if aclient has been in a long-term
relationship and they've gonefrom cohabitation seamlessly
into marriage, then they shouldconsider the pension accrual
(28:26):
period as that whole period oftime, not just from the start of
the marriage to the end of themarriage.
And so the PAG guidance, whichwas originally written, as I
said, in 2019...
designed to help improve theknowledge and practices related
to pensions in divorce cases isreally clear on that and
obviously gives lots of guidancethere for practitioners.
(28:51):
Yeah.
Quite often people arecohabiting for long periods of
time before marriage and theyjust don't know that
cohabitation prior to marriagedoes count as a period of the
marriage as far as...
financial remedy proceedings areconcerned.
So looking at women generally,do you have any advice Sally as
(29:16):
to how women could increasetheir pension pot in any way?
So I think just generally a wayto improve the pension is
Firstly, kind of make sure thatyou're getting paid correctly,
that you think you're on theright pay for the work that
you're doing.
(29:36):
And if not, ask for a pay rise.
Join that workplace pensionscheme.
Don't opt out of it.
Ask to join it if you're notautomatically enrolled.
And make sure you keep thosepension contributions going.
Some employers will also say wewill match your contribution if
you pay X amount.
(29:57):
So I would encourage clients totry and maximise those matched
contributions because this isfree money coming from your
employer that you're going togive up if you don't join the
scheme or don't match thepension contributions.
I think people in general aswell as women just need to make
sure that they're startingpaying into a pension scheme.
(30:18):
as soon as possible.
You'll be auto-enrolled from theage of 22.
So if people are going throughuniversity and then into a
graduate job, make sure you jointhat pension and just start as
early as possible and try not tostop contributing during career
breaks.
So when you are a maternityleave, try and keep paying those
(30:39):
contributions.
Those pension contributions, seethem as part of the household
budget.
Don't just let your husband keephis pension ticking over quite
nicely based on his wage.
Make sure that there's somecontribution into your pension.
So even if you don't have earnedincome in a tax year, you can
still have a contribution paidof£2,880.
(31:03):
per tax year you get tax reliefof£720 so it's free money gross
contribution of£3,600 so itmight be the most you can pay
without some taxable income butit's better than nothing and if
you think about the length oftime that that might be invested
for and that cumulative growthcan be huge and just for the
(31:30):
people that already havepensions you've mentioned it
earlier, use the governmentpension tracing service.
It's a free service.
It's an online form.
You can ring up and askquestions and they will help you
track pension funds that you'vepreviously been in, lost touch
with.
Lots of people have differentlittle pots, don't they?
(31:50):
And, you know, it might be morehelpful to have a consolidated
pension pot rather than variouslittle pots.
SPEAKER_01 (31:57):
Yes.
SPEAKER_00 (31:59):
Here, there and everywhere.
People forget what they havewith previous employers, don't
they?
They do.
And the government, or theprevious government anyway, have
said there was a point in timewhere they were thinking of
having a pension that you hadand it followed you from
employer to employer.
to try and stop you losing touchwith pensions.
That's not happened, but pensiontracing services is excellent.
(32:22):
And as you said, often, some ofthe work that I would do would
be to say, let's have a look atthe pensions that you've got,
the ones that you built up overyour working life.
Let's see if we can consolidatethem.
It can be the best thing to do.
It simplifies things, obviously,from just an administration
point of view.
It will probably reduce thecharges because some pension
(32:44):
providers reduce the charge themore that you invest.
So if you consolidate them intoone place, you might see that
the charge is reduced.
It's easier to understand.
You get one annual statement.
You can see the value.
You can make sure it's investedcorrectly because you just think
about one pot.
And then equally, once it's inpayment, you've just got one
(33:04):
source of pension payment, notfour or five different smaller
payments coming from differentpots.
The only kind of word of warningis, you know, take advice.
You don't want to be giving upsome of your older pots that
might have guarantees.
So some of the old plans mighthave a higher than 25% tax-free
cash entitlement, so youwouldn't want to give that up.
(33:26):
Or guaranteed growth rates, forexample, or guaranteed annuity
rates.
But generally...
we try to consolidate where it'sappropriate to consolidate a
pension pot.
Yeah, so it's important to speakto a financial planner before
you do any consolidation.
I think so, particularly if yourplans are older in nature, they
(33:46):
may have some of thoseguarantees.
Yeah, okay.
So as regards an older ladymaybe going through divorce
proceedings and maybe she hasn'tgot very much pension at all,
but she's got estate pension, Isthere any way in which you could
increase a state pension?
(34:06):
Yes, there are.
There are a couple of differentways.
I mean, a state pension is avaluable benefit built up by
paying a number of years ofnational insurance
contributions.
So for the new state pensionthat started after 2016, you
need 35 full years of nationalinsurance contributions to get
the maximum state pension.
(34:27):
You need to have a minimum of 10years just to get any state
pension.
But state pension in this taxyear is£221.20, which is£11,500
a year.
And we know it's going to go upagain next year.
So it'll be just under£12,000next year.
So the first thing to do is toget your state pension forecast,
(34:48):
check what you are going to bepaid and check that national
insurance contribution historyand see if there are any gaps.
We're in a period now where...
you can make up those missedyears.
Usually you can only go back sixyears, but now you can make up
(35:09):
missing years from 2006 up to2016.
You can only do that up to Aprilnext year.
So there is this chance to findout what your missing years are.
The state pension team willcalculate how much that costs to
make a voluntary contribution tobuy those extra years.
(35:29):
So I would always suggest to myclients, get your state pension
forecast.
Let's see if you've got anymissing years of national
insurance contributions.
Let's see how much it costs.
It's usually really good valuefor money, that exchange of you
handing over a lump sum of cashto get those added years of
state pension because it'sguaranteed income that's going
to increase every year.
SPEAKER_01 (35:50):
There's
SPEAKER_00 (35:53):
also something called the Specified Adult Child
Care Credits.
And they started in 2011.
And this is where you might becaring for a child in your
family, a child of up to the ageof 12.
So I see this a lot withgrandparents, but it also
applies to great grandparents orgreat great grandparents or
(36:16):
siblings and aunts and uncles ofthe child.
You can make a claim.
because you're caring for thechild under the age of 12, where
the parent is also claimingchild benefit for that child.
But for example, if the parent'sclaiming child benefit and are
working, they're kind of gettinga double national insurance
(36:37):
credit, so they've got a sparecredit almost.
So with the parent's agreement,you can ask for that credit to
be transferred to you.
So that helps you get an extrayear or years of national
insurance contributions to boostyour state pension.
that also applies to spouses andex-spouses not living with a
(36:58):
child as well.
Yeah, oh gosh, I didn't knowthat.
Very few people know about that.
That's very interesting, Sally.
Thank you very much.
Thank you.
Bye.
SPEAKER_00 (00:18):
Hello, welcome to my family podcast.
I'm Jane Tenquist.
I'm head of the family team atMyerson and I specialize in
financial remedies on divorce.
I'm here today with SallyBeresford, who is a financial
planner from Evelyn and Partnersin Manchester.
(00:39):
Sally specializes in helpingclients on divorce implement
their pension sharing orders andrestructuring and rebuilding
their wealth post divorce.
The topics we're going todiscuss today are why is it that
women are so underpensioned?
Why is their pension so muchlower than men's in general?
(01:20):
Welcome Sally for joining ustoday.
We're going to talk about why isit that women in general have
far less pension to men.
As a family lawyer I've noticedthis feature during my work
dealing with pensions on divorceand I was wondering why from
your point of view as afinancial planner who advises
(01:43):
people on implementation ofpension sharing orders, whether
you've also noticed thisfeature?
Yes, Jane, you're absolutelyright.
We see this a lot.
I mean, most people have heardof the gender pay gap, but there
absolutely is a gender pensionsgap as well.
And there's lots of researchinto what that means, what the
differences are, why that is thecase.
(02:06):
The Department of Work andPensions published a paper in
2022 which looked at the valueof men's and women's private
pension savings that weren't yetin payment at age 55 that said
that they found that men havearound 35% more pension value
than women that had gone down sothe stats were kind of getting
(02:28):
better for women from theprevious survey and paper and
And Charles Stanley have quoteda stat which shows that women
retire on average with a pensionpot valued at£69,000.
It's really low, isn't it?
Yeah.
So that's a difference of nearly£137,000.
So we see this a lot.
(02:52):
And it's a constant issue in thetype of advice that we are
providing in terms of womenhaving more pension savings.
There's another stat that saysthat by 2026, 60% of the UK's
wealth will be in the hands ofwomen.
So whether that's actuallypension fund values or whether
(03:12):
that means kind of the controlof the family finances, I'm not
quite sure.
And why do you think that isthat women have far less
pension?
and we've gone through thestatistics, but why do you think
that women have far less pensionthan men?
There's a variety of reasons.
(03:32):
I mean, in general, there areless women in work than men,
less women are employed.
The women that are employed...
do tend to be paid less.
We see that through the genderpay gap studies.
Legal in general have said thatby the age of 27, a woman is
already earning on average10,000 pounds a year less than a
(03:54):
man.
So that then translates into thepension contributions.
You might be paying the samepercentage, but your salary is
lower.
So in monetary terms, thatcontribution is less.
More women do tend to workpart-time or in a temporary
position than a man might do andtherefore their annual pay is
generally lower because they'reworking less hours or less days.
(04:16):
And that has an impact then onauto enrolment.
The government obviouslyintroduced auto enrolment to try
and encourage everybody tocontribute to a pension.
But there are certain parameterson when you are auto enrolled or
not.
So you're not automaticallyenrolled into a pension if you
earn less than£10,000.
(04:37):
So if you're a lady in apart-time job and your salary is
less than£10,000, you're notgoing to automatically get added
to a pension scheme.
You can ask to get added to itif you earn over£6,000-ish and
your employer then contributes.
But I think because you wouldn'tautomatically be auto-enrolled,
you probably just ignore it andcarry on and don't think about
(05:00):
your pension.
And then there's kind of moreobvious things like there's the
career interruptions.
women going on maternity leave,choosing to stay off work and
not returning to work.
So the pain reduces during theperiod of maternity leave, might
come to a complete stop.
They may have a career breakrather, staying at home looking
(05:21):
after the children and might notreturn to work.
And they're just not thinkingthen about the pension
contribution.
The husband perhaps is still inwork, still contributing to his
pension, but they're notthinking of the finances as a
kind of a household budget.
the man's got his pensioncontribution going out
automatically through his paybut they're not thinking of i
(05:42):
should also be paying into apension i should also try and
keep those contributions goingas a divorce lawyer i i find
that pensions are a topic thatlots of people don't understand
and um Some women in particularare very focused on what's going
(06:06):
to happen in the immediate termand they want to rehouse
themselves in a house andpension is of secondary
importance.
But quite often the pension ismore valuable than the equity in
the matrimonial home.
And I often advise people to goand get some advice from a
pension financial planner orfrom a pension actuary on
(06:30):
divorce to give them options inrelation to pension sharing and
their best options really andsometimes people are reluctant
to invest in that sort of advicebut I think that divorce is the
most expensive and the biggestfinancial decision that you'll
(06:54):
ever make during the course ofyour life and it's important in
respect of pensions inparticular, that you get the
right sort of advice.
So in relation to pensions, canyou sort of explain, Sally, the
valuation of whether the valueof a pension is based on the
(07:14):
CEV, the cash and equivalentvalue of the pension or not?
Well, I suppose just to cover,there are two kind of main types
of pensions.
One where we're looking at thetime of divorce and we're
looking for the cash equivalentvalues.
You'd be referring there mostlyto a defined benefit or final
(07:37):
salary pension scheme.
Whereby that pension scheme hasa known future value.
So for the member of the pensionscheme, there's a formula that's
calculated that says based onyour length of service, your
salary and the accrual rate, wecan tell you at retirement age,
this will be the pension thatyou built up.
(07:58):
And that's where that cashequivalent value is needed.
At the time of divorce, the cashequivalent value is looking at
what would it cost the scheme toprovide those benefits to that
member.
The other type of pension schemeis the defined contribution
scheme.
So the defined contributionscheme are now more popular.
That's the type of scheme thatyou would be auto enrolled into
(08:19):
if you were in a workplacepension.
And that is quitestraightforward.
The value is what it says onthat statement.
It's that monetary pot amount.
But the difference with thattype of scheme is you know what
you contribute in, you know whatyour employer contributes, but
you don't know the futurebenefit.
There is no guarantee of whatcomes out of that pension.
(08:42):
But from a valuation point ofview, it's very straightforward.
It's just what the statementsays.
Now, the cash equivalent valueon a defined benefit or a final
salary scheme needs an actuarialcalculation.
And scheme by scheme will bedifferent.
The assumptions made oninvestment returns or interest
rates, for example, may bedifferent per scheme.
(09:05):
So you might find that, forexample, if one person has got a
guaranteed future pension of£10,000 in one scheme, that
might have a value.
I'm just picking figures now of£300,000.
But another scheme also mightprovide a pension of£10,000 per
annum.
But that cash equivalent valuemight be different.
£200,000 because the scheme willbe doing the valuation slightly
(09:28):
differently based on that schemeassumptions.
What's really important is tounderstand that if there is a
pension sharing order of adefined benefit scheme, a lot of
defined benefit schemes don'tallow a share of pension to an
(09:51):
ex-spouse to remain within thatpension scheme.
they will say you have to takewhat's called an external
pension credit and find a homefor this value of pension that
you've been awarded.
Let's say it's 25% of the schemecash equivalent value.
So you've got to be really awarethat you're giving up that known
(10:13):
guaranteed pension promise andyou're taking your pension
credit into, probably, a definedcontribution scheme.
And you've then got to look at,well, what will this capital
amount of pension fund valueprovide me with in the future?
And that's really where youneed...
Advice, financial advice,because as financial planners,
(10:34):
we can understand thecomplexities of the scheme.
We can understand the differentoptions.
Let's say when you are in adefined contribution scheme in
terms of drawing down an income,can you take some tax free cash
or not?
At what age are you going to beable to do this?
What are the tax rules onstructuring that income for you?
So just going back to what yousaid earlier, the financial
(10:56):
planning element of advice isreally crucial.
Because we could save thousandsand thousands of pounds.
We can help you even understandand negotiate a better financial
settlement and get the pensionsshared in the best way, into the
best new scheme, implement itcorrectly, and then the income
(11:18):
and the benefits set up in thebest way.
So sometimes when clients cometo see me, they...
I'm really not interested inpension because my priority is
to find a house for themselvesand their children.
And they just simply don'tunderstand pensions or they're
just not interested in having apension sharing order because
(11:41):
they feel morally that's theirpriority.
husband's asset and not theirsand they don't want to ignore to
annoy their husband by bytouching touching the pension
because you know that's his sortof um uh he he doesn't want to
negotiate on pensions why whywhy would what what are the
(12:03):
dangers of ignoring pensions ondivorce and what advice would
you give give to those peoplesally Yeah, I would say I do.
I completely understand whysomebody might say that.
That emotional aspect, isn't it,of I just want the security, the
comfort of the home, providingthe home for the children, for
example.
(12:23):
And you're absolutely right.
I think there is just a lack ofunderstanding of what pensions
mean, what they do, how they canprovide for you.
Again, there's more stats on,you know, legal in general have
said 33% of women don'tunderstand pensions and they are
less likely to have been engagedwith a financial planner.
(12:43):
They're less likely to have anISA, stocks and shares ISA, less
likely to have a pension.
So I think as a financialplanner, we can help initially,
again, just with that educationof the value of a pension.
Yeah.
Women live longer than men.
The average life expectancy of awoman is much longer.
(13:04):
It's roughly age 82 and a man's78.
So I think for the long termfinancial security, although it
might give somebody comfortinitially to have secured the
family home, they really do needto think of, well, how am I
going to provide myself with anincome?
in the future and that's wherethose cash flow modelling tools
can come in and help justdemonstrate in a nice colourful
(13:27):
chart that actually meanssomething where we can look at
figures up to somebody's 100thbirthday.
Can you explain a little bitabout cash flow modelling and
how that works then?
Yeah, so cash flow modelling isreally just a very sophisticated
(13:50):
tool.
The better the information weput in, the better the output
is.
But essentially, we feed intothis tool a client's income,
expenditure, assets, debts, forexample, and we can plot for
every age what that income andoutgoings might look like and
what a client's overall assetvalue looks like as well and how
(14:12):
it's made up.
So what are the sources ofincome?
What is the expenditure?
What makes up the assets?
Is it cash?
Is it investments?
Is it pension?
Is it property?
And we can use the tool to modeldifferent scenarios.
So in the case of divorce andlooking at financial
settlements, we can actuallysay, what would it actually mean
in this case where you're beingtold that you could have a
(14:36):
settlement of X amount ofhundreds of thousands of pounds
or X Or you take the family homeinstead of that.
And a maintenance payment of Xamount a month for so many
years.
What does it actually look likein real terms?
Are you going to be able tosupport yourself?
Is it what you need?
(14:56):
When might it run out?
When might you see someshortfalls?
Or actually, does it all looksuitable?
And you are going to be able tomeet your needs.
Because numbers on a spreadsheetreally don't mean anything.
But the numbers within a toolthat allow you to see your
financial future actually meansomething.
And we can use this tool satwith you and a client around the
(15:19):
table to say, let's just have alook if the financial settlement
was structured in a differentway.
So if you had an initial...
larger bits of capital andsmaller maintenance payments or
larger maintenance payments andsmaller capital, or you had this
percentage of a pension or thispercentage of a pension, what
does it actually mean in termsof the value of your assets over
(15:41):
your lifetime and the ability touse those assets to give you the
income that you need?
So that really emphasises,doesn't it, the importance of
getting a financial plannerearlier on within the divorce
process so that you've got timeto think about how much of a
lump sum do I need in order toprovide for my lifestyle for X
(16:04):
number of years and when's themoney going to run out?
And it's important to sort ofhave all that information to be
able to make the right decisionsin relation to...
pension pots isn't it and andlump sums on divorce really and
just because just because youyou're wanting the house doesn't
mean that you can't have thepension but quite often people
(16:27):
will just say well we've decidedwe're going to split the housing
we're going to keep our pensionsto ourselves and but there may
be an enormous disparity betweenthe their respective pension
parts that's it and you can'treally see it can you you might
see a figure on a page but whenyou can actually plug the
figures through a tool and seewhat that looks like I always
(16:49):
say it gives clarity andhopefully comfort and if it
doesn't give comfort then weknow the steps that we need to
make Yeah.
Yeah.
Yeah.
Yeah.
(17:18):
What's the income going to looklike?
What are the underlying assets?
What assets will you be leftwith at the end of your
lifetime?
Obviously, there are someassumptions in there for things
like inflation or interest ratesor the investment return, but we
make sure that it's specific tothat client.
So, for example, if it's a ladywho's got no investment
experiences, a bit nervous, it'snot appropriate to assume that
(17:42):
her invested assets or thepension share that she's going
to receive and then be invested.
would be invested at a highlevel of risk we're not going to
plug into the tool that shereceives a seven percent a year
return we're going to put intothe tool a more realistic
investment return of threepercent a year for example you
know it's really tailoredspecifically to that individual
(18:04):
yeah those women have differentum investment approaches don't
they in terms of their riskprofile generally compared to
men it's back to that same thingisn't it of the knowledge and
the education and the comfort ofunderstanding finances and
because women live longer thanmen it would make sense that you
(18:26):
do have a pension entitlement touse in the future if you don't
take any of the pension and youhave the family home, at some
point you're going to have tosell that home, aren't you?
And you're going to have toreinvest the proceeds somehow to
buy a smaller house, let's say,and then reinvest that money.
But the cash flow tools can alsohelp look at the tax position as
(18:48):
well at different points inlife.
So what's the most tax efficientway for you to receive a
settlement?
What does that look like in thefuture?
I think people perhapsunderestimate what their
retirement cost might be.
how much might they spend sothere's a body called well it's
(19:08):
the retirement living standardsreport looks at each year what
level of income you would needto have either a minimum or
moderate or a comfortablelifestyle and they include
within that things like thetypes of holidays that you may
take or how often you mightholiday and you know is it Is it
overseas or is it in the UK?
And how much would you spend onbirthdays and Christmases?
(19:30):
Or how often do you change yourcar and make gifts to charity
and things like that?
But they say that a minimumsingle person lifestyle is
£14,500 a year.
Moderate is£31,300 a year.
And a comfortable lifestyle is£43,100.
So I kind of refer to thatreport as a way to say...
(19:55):
What kind of lifestyle would youexpect to have?
And most people certainly wantcomfortable.
When clients come to see me, I'mreally not interested in pension
because their priority is tofind a house for themselves and
their children.
And they just simply don'tunderstand pensions or they're
just not interested in having apension sharing order because
(20:15):
they feel morally that's theirpriority.
husband's asset and not theirsand they don't want to ignore to
annoy their husband by bytouching touching the pension
what are the dangers of ignoringpensions on divorce and what
advice would you give yeah iwould say i do i completely
understand why somebody mightsay that that is that emotional
(20:37):
aspect isn't it of i just wantthe security the comfort of the
home providing the home for thechildren for example um and
you're absolutely right I thinkthere is just a lack of
understanding of what pensionsmean, what they do, how they can
provide for you.
Again, there's more stats on,you know, legal in general have
(20:57):
said 33% of women don'tunderstand pensions and they are
less likely to have been engagedwith a financial planner.
They're less likely to have anISA, stocks and shares ISA, less
likely to have a pension.
So I think as a financialplanner, we can help initially,
again, just with that educationof the value of pensions a
pension um and women live longerthan men the average life
(21:22):
expectancy of a woman is muchlonger it's you know roughly age
82 and a man's 78 so I think forthe long-term financial security
although it might give somebodycomfort initially to have
secured the family home theyreally do need to think of well
how am I going to provide myselfwith an income in the future and
(21:43):
that's where those cash flowmodelling tools can come in and
help just demonstrate in a nicecolourful chart that actually
means something where we canlook at figures up to somebody's
100th birthday.
I quite often use financialplanners during the course of
divorce proceedings to assistwith helping in formulating the
(22:06):
joint letter of instruction tothe pension actuary or in um,
raising questions after thepension report has come in or
deciphering the reports becausesometimes they're very complex
documents and it helps to have afinancial planner to explain the
(22:27):
jargon sometimes and what thatmeans, especially if there are
lifetime allowance issues orcrystallised and uncrystallised
benefits, to understand theterminology.
So it's really important to havea financial planner to assist
you going through divorce andalso in relation to implementing
pensions post-divorce and makingsure that you put your pension
(22:51):
credit into the right scheme andthat it will...
you know, generate the incomethat you need from it.
So it's really important to getthe right type of advice.
As you said, we can help atthose early stages.
As a financial planner, I'm sureI'm right in saying all
financial planners would like tobe involved in that process as
(23:13):
early as possible.
we can help with the modelingtools that we use.
So the cashflow planning, we canhelp look at what that
individual's financial futuremay look like based on different
settlements, a different shareof pension, what that actually
means in real terms, because aclient quite often is completely
(23:37):
bamboozled by numbers on aspreadsheet.
They don't really mean anything,but when you put it into that
cashflow modeling tool andproject forward, what the
financial position looks like,it really does actually need
something and can help you makethose informed decisions.
Working with a client goingthrough divorce at a very early
stage, particularly as you saidearlier, sometimes it is the
(24:00):
female who may not have beeninvolved in the family finances,
doesn't know the detail of them,doesn't understand what a
pension is or an ISA is.
We can help really early on withjust that financial education,
the comfort, providing them withmore knowledge.
And obviously, you know,knowledge is power, allowing
them to feel in a more powerfulposition to say, I understand
(24:21):
this.
I can see now what this means tome in the future.
And I can now make a much betterinformed decision.
I know I'm often asked byclients when we're going through
the divorce procedure you knowif you've got a pension pot why
can't we just divide it in twoand not get a pension actually
(24:45):
involved but sometimesarithmetically dividing it in
two may not actually mean thatboth of the parties have equal
pension in retirement and it'sIt's important that we get a
financial planner involved atthat stage too so that the
(25:07):
clients understand the differentbenefits involved and that
equality of capital may not meanequality of income.
And it's important that we askthe right questions to the
pension actuary at the stagewhen we're instructing how to
(25:28):
equalise pensions, whether...
equalized pensions meaning justcut everything down the middle
or does it mean what sort ofpension would we have if we
retired at age 60 and would thatmean exactly equal pension
sharing or would it mean analternative percentage and
(25:51):
sometimes people struggle tograsp that you know about
equality of income and equalityof capital Yeah, absolutely.
And as you said earlier, afinancial planner can help you
draft that letter of instructionto make sure that you're going
to get the most from it.
You know, not to ask for lots ofdifferent retirement ages on
(26:13):
lots of different alternatives.
Because as you said, the reportsare complex.
They are long.
So you want to make sure thatyou're asking for the right
information.
questions initially to get theright outcome that it actually
means something it will savecosts and it will save time and
most actuaries or pension ondivorce experts the people that
are actually going to writethose reports i think are quite
(26:36):
happy for you to pick up thephone to them as well and say
can i just talk you through thiscase what should i be looking
for can you give me a Quiteoften I'm asked by clients,
especially if they've built uppension prior to marriage and
(26:59):
they have a decent pension potprior to marriage and then they
get married and then themarriage breaks down, that,
well, that's my pension.
I paid into it.
That's mine.
I don't want my ex-spouse tohave a share in that.
She can have a share of thehouse, but not the pension.
(27:20):
And sometimes it's verydifficult to explain to people
that sometimes it is possible toprotect your pension if you're
marrying later on in life by wayof a prenuptial agreement.
But in a long marriage, it isquite difficult to succeed on
(27:41):
arguments in relation to ringfencing, pensions acquired prior
to marriage if there's been along marriage afterwards yeah
you're absolutely right and thepension advisory group that
published the first paper in2019 have published a second
paper this year and that the PAGpension advisory group report is
(28:06):
really clear it emphasizes thatfor needs cases that there
shouldn't be any assets, shouldnot be ring-fenced.
And it's very clear on if aclient has been in a long-term
relationship and they've gonefrom cohabitation seamlessly
into marriage, then they shouldconsider the pension accrual
(28:26):
period as that whole period oftime, not just from the start of
the marriage to the end of themarriage.
And so the PAG guidance, whichwas originally written, as I
said, in 2019...
designed to help improve theknowledge and practices related
to pensions in divorce cases isreally clear on that and
obviously gives lots of guidancethere for practitioners.
(28:51):
Yeah.
Quite often people arecohabiting for long periods of
time before marriage and theyjust don't know that
cohabitation prior to marriagedoes count as a period of the
marriage as far as...
financial remedy proceedings areconcerned.
So looking at women generally,do you have any advice Sally as
(29:16):
to how women could increasetheir pension pot in any way?
So I think just generally a wayto improve the pension is
Firstly, kind of make sure thatyou're getting paid correctly,
that you think you're on theright pay for the work that
you're doing.
(29:36):
And if not, ask for a pay rise.
Join that workplace pensionscheme.
Don't opt out of it.
Ask to join it if you're notautomatically enrolled.
And make sure you keep thosepension contributions going.
Some employers will also say wewill match your contribution if
you pay X amount.
(29:57):
So I would encourage clients totry and maximise those matched
contributions because this isfree money coming from your
employer that you're going togive up if you don't join the
scheme or don't match thepension contributions.
I think people in general aswell as women just need to make
sure that they're startingpaying into a pension scheme.
(30:18):
as soon as possible.
You'll be auto-enrolled from theage of 22.
So if people are going throughuniversity and then into a
graduate job, make sure you jointhat pension and just start as
early as possible and try not tostop contributing during career
breaks.
So when you are a maternityleave, try and keep paying those
(30:39):
contributions.
Those pension contributions, seethem as part of the household
budget.
Don't just let your husband keephis pension ticking over quite
nicely based on his wage.
Make sure that there's somecontribution into your pension.
So even if you don't have earnedincome in a tax year, you can
still have a contribution paidof£2,880.
(31:03):
per tax year you get tax reliefof£720 so it's free money gross
contribution of£3,600 so itmight be the most you can pay
without some taxable income butit's better than nothing and if
you think about the length oftime that that might be invested
for and that cumulative growthcan be huge and just for the
(31:30):
people that already havepensions you've mentioned it
earlier, use the governmentpension tracing service.
It's a free service.
It's an online form.
You can ring up and askquestions and they will help you
track pension funds that you'vepreviously been in, lost touch
with.
Lots of people have differentlittle pots, don't they?
(31:50):
And, you know, it might be morehelpful to have a consolidated
pension pot rather than variouslittle pots.
SPEAKER_01 (31:57):
Yes.
SPEAKER_00 (31:59):
Here, there and everywhere.
People forget what they havewith previous employers, don't
they?
They do.
And the government, or theprevious government anyway, have
said there was a point in timewhere they were thinking of
having a pension that you hadand it followed you from
employer to employer.
to try and stop you losing touchwith pensions.
That's not happened, but pensiontracing services is excellent.
(32:22):
And as you said, often, some ofthe work that I would do would
be to say, let's have a look atthe pensions that you've got,
the ones that you built up overyour working life.
Let's see if we can consolidatethem.
It can be the best thing to do.
It simplifies things, obviously,from just an administration
point of view.
It will probably reduce thecharges because some pension
(32:44):
providers reduce the charge themore that you invest.
So if you consolidate them intoone place, you might see that
the charge is reduced.
It's easier to understand.
You get one annual statement.
You can see the value.
You can make sure it's investedcorrectly because you just think
about one pot.
And then equally, once it's inpayment, you've just got one
(33:04):
source of pension payment, notfour or five different smaller
payments coming from differentpots.
The only kind of word of warningis, you know, take advice.
You don't want to be giving upsome of your older pots that
might have guarantees.
So some of the old plans mighthave a higher than 25% tax-free
cash entitlement, so youwouldn't want to give that up.
(33:26):
Or guaranteed growth rates, forexample, or guaranteed annuity
rates.
But generally...
we try to consolidate where it'sappropriate to consolidate a
pension pot.
Yeah, so it's important to speakto a financial planner before
you do any consolidation.
I think so, particularly if yourplans are older in nature, they
(33:46):
may have some of thoseguarantees.
Yeah, okay.
So as regards an older ladymaybe going through divorce
proceedings and maybe she hasn'tgot very much pension at all,
but she's got estate pension, Isthere any way in which you could
increase a state pension?
(34:06):
Yes, there are.
There are a couple of differentways.
I mean, a state pension is avaluable benefit built up by
paying a number of years ofnational insurance
contributions.
So for the new state pensionthat started after 2016, you
need 35 full years of nationalinsurance contributions to get
the maximum state pension.
(34:27):
You need to have a minimum of 10years just to get any state
pension.
But state pension in this taxyear is£221.20, which is£11,500
a year.
And we know it's going to go upagain next year.
So it'll be just under£12,000next year.
So the first thing to do is toget your state pension forecast,
(34:48):
check what you are going to bepaid and check that national
insurance contribution historyand see if there are any gaps.
We're in a period now where...
you can make up those missedyears.
Usually you can only go back sixyears, but now you can make up
(35:09):
missing years from 2006 up to2016.
You can only do that up to Aprilnext year.
So there is this chance to findout what your missing years are.
The state pension team willcalculate how much that costs to
make a voluntary contribution tobuy those extra years.
(35:29):
So I would always suggest to myclients, get your state pension
forecast.
Let's see if you've got anymissing years of national
insurance contributions.
Let's see how much it costs.
It's usually really good valuefor money, that exchange of you
handing over a lump sum of cashto get those added years of
state pension because it'sguaranteed income that's going
to increase every year.
SPEAKER_01 (35:50):
There's
SPEAKER_00 (35:53):
also something called the Specified Adult Child
Care Credits.
And they started in 2011.
And this is where you might becaring for a child in your
family, a child of up to the ageof 12.
So I see this a lot withgrandparents, but it also
applies to great grandparents orgreat great grandparents or
(36:16):
siblings and aunts and uncles ofthe child.
You can make a claim.
because you're caring for thechild under the age of 12, where
the parent is also claimingchild benefit for that child.
But for example, if the parent'sclaiming child benefit and are
working, they're kind of gettinga double national insurance
(36:37):
credit, so they've got a sparecredit almost.
So with the parent's agreement,you can ask for that credit to
be transferred to you.
So that helps you get an extrayear or years of national
insurance contributions to boostyour state pension.
that also applies to spouses andex-spouses not living with a
(36:58):
child as well.
Yeah, oh gosh, I didn't knowthat.
Very few people know about that.
That's very interesting, Sally.
Thank you very much.
Thank you.
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