7th December 2015 at 2:39pm
It’s a fact that women still have less pension savings than men. And having less savings means they’re going to be worse off in retirement.
It’s a worrying picture which led Pensions Minister Ros Altmann to say that when it comes to pensions, women are “second class”.
The Women and Retirement Report 2015 from Scottish Widows sheds some light on what’s behind this.
Men and women save differently
When it comes to saving, women begin to fall behind men from quite early on. Men start saving, on average, at the age of 29 but women don’t put money into their pension until two years later.
Some might suggest that they’re not prioritising saving enough but the stark reality is women often earn less than men throughout their working lives. The gender pay gap is shrinking but it’s still there; and women often leave the workforce or work part time to look after children or relatives.
Juggling childcare, mortgages and part time or lower-paid jobs (a sizeable number earn under £10,000 a year) leads to too many women not managing to save enough, or at all.
Can women afford to save enough?
There’s a real risk some women won’t have enough money to comfortably see them through their retirement. ‘The Women and Retirement Report’ explains: “It’s today’s 30-49 year-olds with young families that are most at risk. With related career breaks, funding is still a far greater problem for women at this age than men. In fact, 25% of females aged 30-49 are non-savers compared with only 15% of men.”
Coupled with changes which mean women – and men – will get their State Pension later, it’s not a recipe likely to give many the kind of retirement they expect or want.
Things are getting better
It’s not all doom all gloom. Just over half of women are now saving adequately for their retirement, a figure which is improving all the time and up from 40% two years ago.
Auto enrolment – where people automatically join their workplace pension unless they choose to opt out – is doing a lot of what it set out to do in the three years since it was introduced.
Then there are recent figures from the DWP showing that older working age women (age 50-64) are more likely to be in employment than at any time in the past 30 years. With more women in the workplace earning, there’s a golden opportunity to start or build a workplace pension.
Mind the pensions gap
There’s no easy, quick fix to get women saving more but auto enrolment has an important role to play, as does making sure everyone has the information they need to make decisions about their finances.
Almost half of women say they want to understand more about workplace pensions, and personal pensions in general.
Being better informed could go some way towards giving women the retirement they want.
Get informed about workplace pensions
Figures: The Women and Retirement Report 2015, Scottish Widows.
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The information in this blog or any response to comments should not be regarded as financial advice. Pensions are investments and their value can go up or down and may be worth less than you paid in. Laws and tax rules may change in the future. The information here is based on our understanding in December 2015. Your personal circumstances also have an impact on tax treatment.