Women taking career break could cut pension by nearly a quarter

Mon, 27/05/2013 - 10:42 -- Editor

A new report just published has warned women thinking of taking a career break that it could cost them dearly in terms of their pension income when they retire.

The report, based on taking a 5-year career break from age 30 to 35, would particularly apply to women who stop work to spend time at home, when they start a young family.

The report, by Duncan Lawrie Private Bank, uses an example retirement fund to look at the effects of such a career break on long term finances.

A 40 year career starting with a £25,000 salary, increasing at 3% per annum, contributing 5% of salary per annum, and with no career break, would accumulate an estimated £330,000 retirement fund.

However, with a five year career break, the retirement fund would be only £250,000, which means a shortfall of £70,000.

This means that those taking a break from work could see their eventual income from their pension reduced by up to £4,680 a year.

See Duncan Lawrie's report summary here: https://www.duncanlawrie.com/news-and-views/press-releases/current/women-taking-career-break-could-reduce-pension.aspx