How to avoid savings and pension regret

Posted 05 March 2016

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Not saving and starting a pension are the two biggest money regrets women have. Learn how to avoid them with our blog.

This week our blog is all about women and their relationship with money and debt. So far we’ve talked about the research we’ve done into this area and where women learn about finances.  Today, we’ll be looking at the importance of having savings and a pension, and how you can go about getting these areas of your financial life sorted of you haven’t already. 

What the research says

According to our Women and Debt research, the biggest financial regret women had across the board was not having more savings or starting a pension pot. We also asked women what money advice they’d give their younger selves, and a massive 57% said that they would tell themselves “not to spend money that they don’t have” and to save as much as possible. So, it seems women’s biggest regrets centre on not preparing for the future. 

After doing the research, it would be foolish to not take the results on board, so we thought we’d put together a how-to guide, if you’re just getting started in the area of savings and pensions. Hopefully, by the time you’re done reading, you’ll feel empowered to start your savings and a pension pot and in so doing, create a stable financial future for yourself. 


Let’s start by looking at the simpler of the two big regrets: savings. So, obviously, the first thing you need is a surplus in income, or put another way, you need to earn more than you spend and put the extra away. 

The best way to do this is by putting the money in a savings account – ideally one that pays as much interest as possible (although rates on savings are low at the moment). And don’t think you have to stick with the same bank that you have your current account with either. Why not have a look at the different rates available from other savings providers by clicking here, this way you’ll make sure you get the highest rates possible. If your budget allows it, keep adding to the money bit by bit. You could even set up a direct debit that goes from the account that your wages go into, to your savings account so you’ll save every time you get paid without even thinking about it. If you do this, just be sure you have enough in your current account without jeopardising any priority bills

We’ve written a lot on saving in the past, and the main thing to remember is that it doesn’t matter how you do it or how much you have to put away – the important thing is that you do it one way or another! For instance, some people find it’s easier to stay motivated by saving little and often. In this case get your trusty piggy bank out and, every week or two weeks, put a little in and then transfer it to your savings account. 

You could save by cutting something non-essential out and saving the exact amount that you would have spent on that thing. This is a good way to really start paying attention to how the little expenses in life can add-up. If you want to delve deeper into this, why not have a go at keeping a spending diary. Maybe keep a little notebook with you – or use your phone – and write down every little thing that sucks up your money day-to-day over one or two months. This will give you a sense of control over what you spend and when you spend it, and you’ll be able to identify patterns that you may not have been aware of before. Keeping a spending diary is actually a really important part of putting together a great budget because it’ll make your outgoings column super accurate. If you’re wanting to save more by curbing your spending, a spending diary can be your ultimate weapon. 

As we said, you don’t have to save a huge amount, just a little something to cover you for a rainy day would be a great start. Open a savings account as soon as possible because the more time the money’s in there, the more time is has to earn interest. 

How pensions work

So let’s move on to the slightly more complex area of pensions, the second of the big two regrets most women had. 

First a definition, so we’re all on the same track. A pension is a way of saving, tax free, for your retirement. A pension can be paid into by you and your employer, and the Government will refund the tax you’ve paid on your contributions back into it as well. 

When you decide to retire, you can either draw money from your pension as you wish, or if you want, you can use your pension pot to buy an annuity that will pay you a regular income until you pass away. If you were following the news when the 2014 budget was announced, you’ll know that people are now allowed to access their pension pots however they like once they reach the age of 55. 

There are two different kinds of pensions: state pensions and personal/workplace pensions. Your personal/workplace pension builds-up over time as you earn throughout your working life and the state pension comes from the Government as a separate amount. The pensions would then be paid out to you when you retire, and the whole amount (both personal and state) would be taxed at your income tax rate at the time. 

Tax relief on pensions

The tax relief you get on pensions makes them a really great way of saving for your golden years. Most people in this country pay 20% on their earnings to the taxman. When you or your employer come to make a contribution to your pension, the difference between what you actually put in after tax and what you would have put in, had you not been taxed, is added back into your pension pot. In some cases your employer will put the money into your pension straight from the pre-tax earnings, in which case you were never taxed on it to begin with. 

You will only get tax relief on contributions up the amount of your annual earnings. So, if you earn £20,000 a year you can put more than this amount into the pot if you want to – but you won’t get tax relief on anything over £20,000. We know that this is unlikely, but it’s something to bear in mind if you manage to save a lot, or you suddenly come into an inheritance. 

If you don’t pay the basic rate of 20% tax, then the amount that you get back may be different. Have a look at the Government’s page on this to find out more. 

Work place pensions

The Government’s aim is to make all employers offer a workplace pension scheme to their employees by 2018 and they will also have to contribute to your pension. This rule was brought in to address the fact that not enough UK adults were starting pensions and saving for their older years – and we can certainly see that, amongst women at least, this can prove to be a big regret. 

You don’t have to have a workplace pension, but unless you say so, most people will be automatically enrolled. If you’re not sure whether you have one or not, contact your employer’s HR department. 

The sooner you start the better

The longer you pay into your pension, the more money you’ll have to draw on when you retire and the more opportunity there is for your investment to grow. That’s why it’s so important that you start your pension as early as you can, so you give it time to grow. This could also be why so many women regret not starting their pension earlier on in life. 

How much you put into your pension is up to you, just make sure that you put more money into your pension every time you get a pay rise. 

So there we have it, thanks to the research we now know the biggest money regrets women have and you should now know how to avoid savings and pension regrets. Make sure you keep an eye out on our blog this week, as we’ll be bringing you more information about women and debt and how to take control of your finances. And, if you haven’t already, go back and catch up on our earlier posts in the series. 

by Christine Walsh

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