One month can make all the difference when it comes to expat women’s pensions and that pension annuity. Thanks to the terrible economic situation we are currently witnessing, we are all being forced to cut back our spending and do everything we can to make money go further. And recent research shows that it is women are perhaps being even more negatively affected by this current financial downturn than men.
Recent research from Scottish Widows, suggests that things are now so difficult for women that increasing numbers of them are failing in their efforts to save anything towards their retirement. It’s always been a sad fact that the great pensions divide we seem to have sees women at more risk of falling on hard times when they retire, particularly if they face divorce during their lifetime too. However, the latest news that the current recession is preventing a lot of women from saving anything towards retirement and that annuity purchase is frightening.
But it doesn’t have to be this way necessarily, particularly for those expatriate women who are living and working abroad. It is definitely time to explain to these expat women how a single month can actually make a real difference for them when it comes to having an income at retirement age, or having nothing at all. Chances are, if you’re a woman you’re probably not saving for a pension, and if you are, you’re not saving nearly enough. Whilst nearly two thirds of men in this Scottish Widows survey were on track for a comfortable retirement, if they get the right annuity rates, according to the amount they were putting by specifically for that retirement income, far less than even just half of all women in the survey came even close to saving enough.
The over fifties are the group that needs the help, because almost a quarter of women over this age are saving a big fat zero into a pension scheme, because they can’t afford to, because of the current recession, an uncertain jobs market, and the poor returns available on saved income. And, expat women are even more affected. Women who live and work abroad for at least a portion of their career, or who take a break to accompany their partner overseas are at an even greater risk of falling well short when it comes to having enough saved to have a comfortable retirement.
This is because during such a planned short sojourn overseas many women stop contributing altogether into an employer’s scheme or a personal pension plan back in their old nation, and they also lose out by paying taxes overseas but not contributing into their old home nation’s state scheme to ensure they build up enough tax credits to have a proper state pension, if possible, upon retirement.
The head of pensions market development within Scottish Widows explains that as a company they strongly believe that to have a comfortable pension, you should save a twelfth of your annual income. However, setting aside effectively an entire month’s salary is clearly not practical for most individuals, but putting one twelfth of what you earn each month into a pension fund is more palpable, especially if you plan properly to do so, commit to doing so and take full advantage of the very flexible savings and tax options you have as an expat.
Whilst onshore pension rules are quite strict, limiting the amount you can actually save, when you can take an annuity, how you can take it, offshore pension schemes such as the British government backed QROPS (full name, qualifying recognised overseas pensions schemes) are the epitome of proper flexibility and really suit many expat women’s lifestyles, spending and savings habits. You can save as much as you can and when you can, you can draw down from your pension fund when you want, you can have more options as to how and where your pension fund is invested, and the best news is that you don’t have to buy an annuity with your QROPS monies or offshore pension scheme!
