More women are saving enough money for their retirement, but there is still an average £78K gap between women and men’s retirement income due to the gender pay gap, says a new report.
More women are saving for their retirement, but men have on average £78,000 more in their pension pot at retirement, according to a new report.
The 15th annual Scottish Widows Women and Retirement Report shows 57% of women are now saving enough for their retirement – the highest proportion recorded in 15 years – and that average savings amongst women are up 4.6% since 2007/08, equating to an additional £5,900 in income every year of retirement.
It says the number of women contributing something to a pension pot has risen by 14.6% over the last 15 years, compared to a rise of just 8% among men.
However, it states that the gender pay gap means that men are still putting away more money overall
– benefiting from, on average, an additional £78,000 in their pension pot at retirement.
The report says auto‐enrolment has helped more women to save, but that several groups of women
remain under‐prepared for retirement, with lower‐middle female earners, for example, those working in supermarkets, call centres, nurseries and care homes seeing the smallest improvements in savings rates over the last decade.
Citing costs such as childcare, the report says just 47% of women earning between £10,000 and £20,000 are saving enough for retirement compared to 65% of those earning £40,000 or more. More than a third (37%) see no other option but to opt out of their pension scheme to manage cash flow, meaning they lose out on valuable employer contributions and tax relief, says the report.
It highlights how pension contributions stop after 39 weeks on maternity leave and the part-time penalty faced by many women as contributing factors.
Moreover, four in 10 women (42%) don’t know how much they are actually saving for retirement and more than half (55%) have doubts that they are putting aside enough money.
Jackie Leiper, Distribution Director at Scottish Widows, said: “We’ve come a long way, but 15 years
later there’s still an unacceptable gap between men and women. The groups who are often
overlooked, such as lower‐middle income women, need more support to overcome the challenges
they face in saving for the future.
“Scottish Widows want to see a series of reforms that allow for a more tailored approach to saving.
Increased default savings levels, improving the scope of auto‐enrolment and managed access to
pension savings to support a first home deposit or to overcome a period of financial hardship are
just some of the ways we can make a real difference.
“By doing so, we can ease the financial stresses that disproportionately impact women, such as
those that go alongside life events including starting a family and buying a first home.”