Women’s retirement security is based on one very simple reality: Pension systems aren’t created equal. A woman in London faces entirely different planning challenges from a woman in Melbourne. 

Unfortunately, general personal finance counsel tends to throw all planning together and assume that there’s a universal solution. That’s definitely not the right way to look at things. Whether you’re from the UK and working in Australia or the other way round, you must educate yourself about different financial systems to ensure you have a plan in place to protect your wealth.

Understanding the Core Systems and Differences

In the UK, the basic State Pension relies on the National Insurance contributions you’ve made throughout your working life. Sometimes, it seems like this provides a safety net, which can make financial planning for women complicated. Everyone usually thinks that the State Pension provides their safety net, which means that planning for the actual issue, sheltering the wealth that has been created, has been ignored. In fact, there’s a 40% charge on everything over £325,000 in your estate, which can decimate the funds you intend to pass on to your next generation.

In Australia, your Age Pension is means-tested based on your income and assets. You also won’t qualify for any pensions if you own substantial property or your earnings are high. If you’re earning, you pay superannuation (essentially, your employer pays a percentage of your salary into this investment fund). However, if you’re not working and out of the labor force for one year or more (whether for kids, caregiving, or other reasons), the money you contribute is zero. It means a woman not working for three years during her 30s won’t just lose the employer contribution but also 35+ years of growth on that money.

The critical difference is that in the UK, women need to protect the wealth they have been able to accumulate against taxes. In Australia, they have to focus more on accumulating wealth despite structural barriers. Considering the complexities, it’s a good idea to work with professionals who can help you handle financial planning based on your unique circumstances and local laws. Still, here are a few steps you can take on your own.

Strategic Planning for the UK State Pension Gap

  • Be sure to claim child benefit in your own name for credits in National Insurance contributions if you’re taking a career break.
  • Use spousal contributions during maternity leave to increase pension savings by over £50,000.
  • Encourage contributions from the employer to the pension throughout the statutory maternity pay period to avoid starting from scratch.
  • Increase private pension provision activity, as being part of a workplace reduces the pension gap between the sexes quite significantly.

Strategic Planning for the Australian Age Pension

  • Be sure to check the Age Pension eligibility. If you’re a homeowner and have more than AUD $321,500 in other assets by age 67, you may not qualify for the full Age Pension.
  • Use catch-up contributions to reduce your assessable wealth. Remember, contributions to superannuation decrease your assessable wealth.
  • Make your investment plan revolve around the income test, as it may reduce pensions depending on whether you earn about the fortnightly sum of AUD $181.
  • Be sure to talk to your spouse about superannuation splitting in case you’re getting divorced.

Endnote

Whether you’re in the UK, Australia, or other parts of the world, it’s important to focus on financial planning not in retirement, but today. The earlier you understand your pension scheme, grab what you have, and put into action the financial strategies we’ve shared, the sooner you’ll be on the right path to retirement security.