HSBC reveals that while more women than ever in the UK have pensions, confusion over eligibility means almost two million women are losing out on potential pension income.

According to HSBC, just over a third of women were contributing to a pension in 2005. Three years on and this figure has increased with 54 per cent of women taking control of their retirement futures.

However, while these figures show an improvement in retirement planning, the extent to which women understand it has not improved at all.

The research shows that 38 per cent incorrectly believe that they have to be working to make pension contributions and 54 per cent were unaware that a husband or wife can contribute to their partner’s pension, even if they are not working.

Shockingly, only 19 per cent are aware that they need to be in work for 39 years in order to qualify for a full state pension.

Ian Martin, head of UK retirement businesses at HSBC, says, ‘Our research is very encouraging in that it shows women are increasingly taking control of their own retirement planning. Yet many women are potentially missing out as they are still confused about when they can pay into pensions and who can pay into pensions.

‘If women take time out from employment, either for child care, a sabbatical, or choosing to work part-time, they often stop paying into their pension scheme, or believe they can’t start paying into a pension. This means they are unnecessarily restricting the amount they will be putting into their pension pots.’

For example, a 25 year old making monthly contributions of £100 to a stakeholder pension in an HSBC balanced fund returning seven per cent per annum will achieve a £188,000 retirement fund. If they defer the pension contributions for ten years they will achieve a £96,600 retirement fund, or nearly 50 per cent less. If they defer the pension contributions for 20 years they will achieve a retirement fund of just £45,100, or about 75 per cent less.

Martin adds, ‘We want to ensure that women are realising the sort of retirement income they are hoping for. Factor in that women will generally be retiring around the age of 65 and living on average until they are 88 years old, that’s 23 years of retirement to fund. So it’s important to get the message across that you don’t have to be earning yourself, or working full-time to keep a pension scheme going. You can contribute to a scheme even if you are not working, or your partner or someone else can keep up the contributions for you.’