The Smartest Accessory
Forget the Jimmy Choo Shoes, Every Woman Needs a Good Pension
Tuesday, March 13th 2007
by Charlie Weston

NEVER mind the latest designer handbag or Jimmy Choo shoes, the accessory every smart women should have these days is a pension.

That's the message from a range of female financial advisers who say that women should by all means get the latest designer gear, but they should save for the long term too.

Just 50.6% of female workers have a pension, compared with 58.3% of men, and the likelihood is that the vast majority of women who are not working have no pension. This leads to fears that many Irish women are heading for poverty in retirement.

Financial adviser Ciara Ni Chonaill of Aspire Wealth in Malahide, Dublin, often advises married couples who jointly run a business. The husband almost always has a pension. However, the wife invariably does not, even though they set up the business and run it together.

"I can't understand the logic behind it, but that is what happens," she says.

There are three major reasons why women are from Venus and men from Mars regarding pensions:

* Women live longer. A man retiring at 65 can expect to live to to 81. But a woman retiring at 65 can expect to live to 84.

* Women are paid 16% less, according to the Economic and Social Research Institute (ESRI). And women are more likely to take career breaks or work part-time as they juggle caring and work.

* The structure of families has changed. Women are not marrying at the same rate and marriage break-ups are increasing.

Pensions Board executive Mary Hutch said: "The message for women is simple. We are living longer and therefore need to be especially conscious of how we will finance a good quality of life during retirement."

It is hugely important to start a pension, even if it is only small at the beginning. "You don't have to think big to begin with. Start with whatever you can afford and then crank it up when you get older," advises Ms Ni Chonaill. Financial adviser Anne Hession of Hession Life and Pensions in Oranmore, Co Galway, says that women give greater priority to paying sky-high mortgages and childrearing than pensions. She reckons women have themselves to blame for poor pension provision. "Women need to put a value on the work they do."

The big advantage of pensions is the tax relief. For working people, contributions (up to Revenue limits) benefit from tax relief at your highest rate of tax. So if you contribute €100 a week to your pension and pay tax at the higher rate (41%), the net cost works out at €59 a week. And the contributions are relieved of PRSI and health levy.

With PRSAs (Personal Retirement Savings Accounts), women and indeed men can opt out of the work force and carry forward tax relief for when they are working.

Tax
Veronica Gray of wealth managers Acumen & Trust in Dublin says pensions are all about long-term savings in a tax-efficient manner. "The Government provides incentives for those in the labour market to save over the long term. But where are the incentives for women who are not actively employed? Alright, tax relief can be carried forward, but what if these women never return to the labour market?"

"When you retire and receive your benefits from a PRSA, the balance (after 25pc tax-free cash) will be subject to income tax. The efficiency only exists where tax relief is granted.

"So where is the incentive for a housewife to fund for a pension? What if she never returns to work?"

Even if we soon have dramatically higher State pensions, many women will still suffer a lower standard of living in retirement. So it seems that stay-at-home yummy mummies risk a lower standard of living when they put their feet up later in life.

No wonder they say pensions were invented for men, by men.

*This week is National Pensions Week and the Pensions Board's 'Women and Pensions' is available on www.pensionsboard.ie or by calling (01) 613 1900. The board is also encouraging people to visit its Pensions Calculator and work out their future pension needs on www.pensionsboard.ie.

Original Article: Irish Independent