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More women are saving enough money for their retirement, but they still have a long way to go before they will get a pension that pays out as much as men’s.
The gender pension gap – the number of women and men saving enough money for their pension – has closed to just 1% – the narrowest on record, according to Scottish Widows, but women will still have to work 37 years after the state pension age to have the same pension as men.
Scottish Widows’ latest Women and Retirement Report report shows almost three in five (59%) women are now saving adequately for their pension, compared to 60% of men. However, it says the persistent pay gap and part-time working ratio means women saving adequately on the median wage are still saving £1,300 a year less than men.
The report says just 46% of women in their 20s are saving the recommended minimum 12% of salary. This compares to 56% of men the same age and to almost two-thirds (64%) of women in their 50s.
Scottish Widows says not saving more when they are young means women will miss out on the benefits of compound interest, which can help increase their savings substantially over their working lives.
Jackie Leiper, Managing Director, Workplace Savings at Scottish Widows, said: “While we’re heartened at the record levels of saving, there’s still a mountain to climb before we reach true gender pension parity. Women face decades of extra working before they’ll have a pension to match that of a man’s, which is unfair and unacceptable. Until we can resolve structural inequalities, from the gender pay gap to the uneven division of labour at home, we will never have pension equality.”
The report points out that Automatic Enrolment has played a big role in getting more women saving for the long term, but says the fact that women are still paid less than men, are more likely than men to work part time and face the main burden of caring commitments affect their ability to save.
It predicts that the situation could get worse due to the Covid-19 pandemic due to its impact on sectors where women predominate and the impact of childcare and other caring responsibilities. It says self employment is also a key area and women typically earn a lot less and women’s businesses have been hard hit by Covid. The survey finds that, even before the crisis, 44% of self-employed women were saving nothing at all for retirement, compared to 28% of self-employed men and 12% of permanently employed women.
Leiper adds: “In a matter of months the pandemic is reversing years of progress. We’re calling for urgent pension reforms that will help more women save more for retirement, including improved childcare provisions, enhanced pensions for those on maternity leave, the inclusion of pensions in divorce proceedings and the scrapping of the auto-enrolment minimum earnings threshold.”
Scottish Widows says default contributions through Auto Enrollment should rise and be extended to the self employed; that pension assets are often ignored in divorce proceedings and should be included; and that women would also benefit from enhanced maternity pensions that retain their pre-maternity level and replicate salary sacrifice.