Standard Life has upgraded its Retirement Income Tool to reflect the impact of changing work patterns on future retirement income.
The enhancements include a new feature that enables scheme members to model how part-time work or career breaks may affect their retirement income.
Members can enter their current working pattern, map out any planned changes to their hours and specify how long these changes will last. The tool compares projected retirement income before and after the adjustment, reflecting individual circumstances and pension contribution levels.
It can also factor in the State Pension to projections, whether they expect a full or reduced amount, and show practical steps someone can take to help offset any potential reduction in retirement income.
While moving to part-time work can be hugely beneficial, particularly for those with caring responsibilities or long-term health conditions, it can also impact retirement through smaller pension contributions. Half (50%) of UK adults who have experienced a major life event say it has affected their ability to contribute to their pension.
Analysis by the Standard Life Centre for the Future of Retirement found that women are disproportionately impacted by life events, such as motherhood, divorce, childcare and menopause, which can affect working hours and reduce their ability to save. By mid-life, where care responsibilities fall to one in four women, men are paying 50% more per month into their pension than women.
Emma Furlonger, interim managing director for workplace and retail intermediary at Standard Life, said: “Most people consider taking a career break or reducing hours at some point during their working life. This can be beneficial to allow them to balance work with personal commitments or ill health. The enhanced Retirement Income Tool helps members understand what these choices could mean for their income in retirement and shows the practical steps they can take to stay on track for their long-term goals.
“We want to empower members to engage more with their financial futures, and enhancing our digital tools is a key part of this commitment. Too many people fall behind on their pension savings during a career break and when reducing working hours. Understanding what’s needed to bridge any potential shortfall is the crucial first step towards achieving their retirement goals.”
