Pension ‘blind spots’ related to key life events uncovered by survey
Many people have “blind spots” about the impact of life events on their pension, a survey has found.
More than half (57%) of people surveyed for the Money and Pensions Service were unaware that they could access their pension early due to severe ill health.
And many were unaware they could top up their pension while on parental leave.
Women were less likely to know they can keep paying into their pension while on parental leave (61%) than men (51%), the UK-wide survey of more than 2,000 people who are not retired found.
If someone cannot work any longer due to illness, they may be able to take their pension benefits early, even before the age of 55.
This is generally known as taking an ill-health pension.
Schemes have their own definition of ill-health, but generally people may be considered for an ill-health pension if they can no longer do their usual job due to poor physical or mental health.
Someone who has less than a year to live may be able to take their whole pension pot as a lump sum.
Caroline Siarkiewicz, acting chief executive at the Money and Pensions Service, which is sponsored by the Department for Work and Pensions, said: “Women in particular have many important financial decisions to make when transitioning into parenthood but our findings suggest they are less likely to be aware of their pension options.”
Here are the Money and Pensions Service’s tips for avoiding pensions blind spots:
1. Continue to make contributions to your pension while on parental leave. Check with your employer how this will work. This will vary depending on what type of pension scheme you are in.
2. If you are suffering from severe ill health and wondering what your options are to access your pension, talk to your pension provider. They will be able to explain whether you are eligible to access your pension early.
3. If you are self-employed, you could receive tax relief on the amounts you put into your pension. Further support for self-employed people with their pensions is available through the Pensions Advisory Service who offer a specialist telephone-based appointment service.