I didn’t pay into a pension for 20 years

I’m about to turn 55 and have only just started paying into a pension again – after a 20-year gap. It’s embarrassing to admit to friends and family. I know a lot about investing through my job as a business journalist, and I’ve worked through two pregnancies and went back to work pretty swiftly after them.

Doing something, anything, about my pension has been on my to-do list for years; statements and letters from my old pension providers, from two previous full-time jobs, have been sitting on my desk for longer than I care to admit, gathering dust.

Somehow, it just didn’t feel like an urgent priority to think about retirement and savings. I’d glance at the paperwork every now and then, but in truth we were drowning in too many competing demands. Trying to make sure the kids were alright, keeping on top of the mortgage payments and all the other bills that just come with running a home. We have somehow just about stayed afloat financially, but, in hindsight, drowning was a very real possibility too.

I know how fortunate we are to own a house in the suburbs of London, but like many of our generation, we are asset-rich and cash-poor.

My friends without children would be horrified at my carelessness. A former colleague, Sarah, who came to visit me after the birth of my first, mentioned that she was chasing an old employer about the correct pension contributions. As I sat listening with my sleep-deprived baby brain it seemed too overwhelming to comprehend, let alone to find the right paperwork to actually do something about it.

Fast forward some 20 years, and my eldest started university last September. I’ve only now had the headspace to consider my savings and retirement plans.

Ironically, as I’m turning 55 next month, I’ve also just started receiving letters from my old pension providers reminding me that ‘it’s nearly time to choose my path’. It is truly terrifying to realise that I’m basically old enough to start accessing my existing (pretty negligible) pension pots.

A rising sense of panic sets in: Have I left it too late? How long will I have to work to have a decent retirement income?

The paltry amount in my pensions is only likely to see me through a few years, if that, according to figures from the Pensions and Lifetime Savings Association, which has developed Retirement Living Standards, a framework for understanding the income needed to achieve different retirement lifestyles. Its latest figures show that a single person needs at least £31,300 a year to have a ‘moderate’ standard of living.

When I raise the dreaded pension conversation with female friends, instead of judgment, confessions ensue about similar experiences; it turns out I am far from alone. My neighbour, Jackie, now in her 60s, who has worked as a lawyer on a contract basis wherever her husband’s job took them, ruefully tells me that she has hardly any pension savings at this stage in her career.

Katharine, a former colleague, admits that she only started a pension last year, in her late 40s, now that her kids are teenagers. “Being paid irregularly as a freelancer meant I just couldn’t commit to a pension,” she says. “Also, childcare costs had to come first, and they were very high. My priority was staying in the job market while raising children. The pension was the first to go, as the benefits were a long way off.”

And it’s not just us. Pension Policy International’s 2024 gender pension gap report reveals that women’s pension wealth is a third less relative to men. According to the PPI, women would need to work for an extra 19 years in order to retire with the same pension pot as men. By 67, the new UK state pension age from 2026, they will have saved an average of £69,000 compared to £205,000 for men.

The statistics are pretty depressing. Women make up more than two-thirds of pensioners currently living in poverty. Added to this, 50 per cent of pensioners in poverty are single women.

Freelancers and contractors are not the only ones affected by the gender pension gap. Employees earning under £10,000 a year are not automatically enrolled into a workplace pension. This affects more women than men due to their working patterns.

“The majority of women in their 40s and 50s are only just discovering the size of the shortfall they face. This generation is also much less likely to have access to the ‘golden ticket’ final salary schemes that their predecessors had,” says Stacey Chamberlain, chartered financial planner at Herbert Scott.

“As financial planners, the gender pension gap is something we witness daily. Women are retiring with significantly less than men, often due to a combination of lower lifetime earnings, time out of the workforce for caregiving, and less access to employer pension schemes during part-time or low-income roles.”

When I first started looking into restarting a pension, it felt overwhelming, and my first port of call to try and fathom the investment maze was my circle of friends and fellow freelancers to understand what my options were.

Gina Miller, founder of financial platform MoneyShe, explains that a lack of confidence among women, as well as financial education, is to blame for this “alarming pensions gap”. Research published by MoneyShe, in 2024 found that 43 per cent of women aren’t confident about making investment decisions and lack the knowledge about their options. Added to this, nearly 40 per cent would invest more if they had more financial education and resources.

“Acting now gives you more choices, and peace of mind for future you. Don’t let the pension gap define your future,” says Miller, who is of the view that it’s never too late for women to take control of their pension. She advises those in their 40s and 50s to start now, even with small amounts. “Every pound invested today can still make a difference, especially thanks to generous tax reliefs,” she explains. “Compound growth and tax reliefs work in your favour. So, for example, if you’re a basic-rate taxpayer and pay £80, the government adds £20. That’s free money towards your future.”

“Also, track down old pensions, using the government Pension Tracing Service , and get a state pension forecast – check for gaps and top them up if you can,” she adds.

Chamberlain notes that for the self-employed, a pension fund has distinct advantages over, say an ISA: “As pension funds are not as easily accessible, they are less susceptible to being withdrawn during periods of reduced income. In contrast, more liquid savings, such as an ISA, can be tempting to dip into during financially uncertain times.”

I chose my pension after doing my own research and settled on Vanguard, where you can choose a product based on your age. As my existing pension pots are performing well, I have left them where they are. Being a freelancer means my income can vary from month to month, and I change my payments according to how much I can afford. Despite this, I have managed to build up a relatively sizeable pension pot in a short time, thanks to the government’s tax relief.

I really should have done this about 20 years ago.