I was recently asked to answer some questions from Mumsnetters about their pensions.
With much talk this International Women’s Day of the ‘motherhood penalty’ contributing to the gender pension gap, this exercise was particularly instructive. It taught me a lot about the circumstances of this particular demographic, primarily women in their late 40s and 50s, although some younger, and also their retirement provision.
First off, there were more than 170 questions. More than we expected. I didn’t get through them all, although I wanted to. Women in this age bracket are thirsty for more pension information, but by this, I don’t mean to imply lacking in knowledge, because that clearly wasn’t the case. Many might have said they don’t know enough or even anything, but actually many of those participating were switched on, engaged, well-informed and curious.
Some asked about the best ways to invest a pension - what’s to argue against a passive global tracker fund? Not much, I replied. What’s the best way to access an income when you have a number of pots to draw from? How can I increase my workplace contributions?
Small’s a key word when mothers talk about their pensions. Even ‘absolutely tiny’. They’ve taken pensions when they can get them throughout working life, perhaps in part-time jobs, perhaps built up through a little bit of self-employment at some point. The random mixture of provision through the years, around childcare and in many cases before Auto-Enrolment came in in 2012 and you were lucky if your employer a) offered you a pension and b) actually encouraged you to pay in, is evident.
Mothers’ pensions may be small, but they are numerous. Many referred to a few ‘old defined benefit pensions’ and ‘small DC pots’ - they know the difference between defined benefit (DB) and defined contribution (DC).
I’m not surprised that this group of mothers talk about their old DB pots - the demographic of mothers with older children is just old enough to have had a DB pension through work when they started in working life, before this kind of pension became a public sector rarity.
For some, the DB pot came later in life, after kids and on joining the public sector. Some of the mothers referred to their ‘small’ NHS or teacher’s pension that they have been paying into for the last few years.
While some had some broader questions on pensions in general, most wanted help with their individual circumstances, not generic information. Their circumstances were often relatively complex, even if the sums involved were typically low. The recurring question was: ‘What should I do?’ By far the next biggest question was: ‘Should I consolidate?’.
It’s no surprise that consolidation is high up on their list of queries, with so many small pots around. Mothers like - need - to be organised in every way and I completely understand this desire to Marie Kondo your pensions. But the presence of the odd DB pension in the mix does complicate this effort to get all their pensions in one place.
Unfortunately, even taken together, the total of these pots is unlikely to qualify women for bespoke independent financial advice. That’s why they’re on this Mumsnet board. They need individual advice because of the complicated nature of their career histories and pension schemes, but perhaps can’t afford it because of the smallness of their overall pot. I referred several times to the free Government guidance service, Pension Wise.
Despite the lack of mega bucks, what I found heartening is that mothers do prioritise their pensions, at moments when they can. There’s clear evidence from those asking questions on this board that they have always tried to pay in, even if it’s been a relatively small amount. Mothers do what they can for themselves, although the odds are stacked against them. This is borne out by our own data around the contributions of our female customers, which we also published this week.
I love the fact that pensions are becoming a hot topic of open discussion. Maybe one day, they’ll be discussed as frequently and with as much passion as UK house prices. What would be ideal is if we could all become as clued-up in our own right about pensions as we are property. Answering these questions showed me that mothers on Mumsnet would like to be and I hope I helped just a little bit.
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. Anything discussed on the podcast should not be regarded as financial advice.