23rd October 2013
The number of British women saving adequately for retirement has collapsed to an all time low while more than a third have no pension at all according to new research writes Philip Scott.
The Scottish Widows 2013 Women and Pensions Report has found that just 40% of women, compared to 49% of men, are preparing adequately for later life a drop from 42% last year and 50% in 2011.
The survey found that 37% of women have no pension whatsoever while the same applies for just over a quarter, at 27%, of men.
For those women who are saving they are only managing to put aside £182 a month on average, well below the average amount of £260 amongst men, creating a gender pension savings gap of nearly £1,000 a year.
Saving adequately refers to those saving at least 12% of their income or expecting their main retirement income to come from a defined benefits pension
Lynn Graves, head of business development, corporate pensions at Scottish Widows, says: “It is worrying to see that women are continuing to lag behind men in retirement savings. The number of women preparing adequately for retirement has dropped from last year to a record low.
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“This growing gender gap in retirement savings means that women are facing an ever increasing shortfall when it comes to retiring and must act now to ensure they will not be left exposed in later life.”
The report found that women are coming up against barriers to saving at every stage of life, with different lifestyle factors taking their toll on women of different ages.
Women in their 20s were found to be tied down by short-term financial pressures and are prioritising living expenses paying off debts, travel and holidays or saving for a property over saving for retirement. Over half, at 54% of 22-29 year olds do not have a pension, compared to 37% of the general female population.
Only 50% of women in their 30s work full-time compared with 81% of men of the same age, meaning 30-something women bring in an average gross income of £19,200 – way behind the £28,700 that the average 30-something man takes home. Career breaks and cutting back on hours have a knock-on effect on women’s ability to save, with women in their 30s only saving £87 a month on average towards retirement, outside of pension and property investments. This is compared with the £151 that their male counterparts are saving each month outside of pensions and property.
In addition Scottish Widows found that by the time women reach their 40s, their financial priorities have changed, with 23% of 40-49 year olds saying they had prioritised financially supporting their children over retirement saving in the last five years. Some 24% also said they expect their partner’s income to help support them in retirement, despite the fact that 79% do not know what their partner would be entitled to from their pension fund if they were to separate.
Commenting on the report, Tom McPhail, head of pensions research, Hargreaves Lansdown says: “There is more that can be done to help women enjoy a comparable standard of retirement provision to men. The government can raise Universal Pension Allowance, which has been stuck at £3,600 since 2001 and is falling woefully behind against rising prices. This is an important allowance widely used by non-earning spouses, those taking career breaks and children. Had this increased by RPI inflation it would now be over £5,289. Employers should be encouraged to talk to their employees about the benefits of auto-enrolment, to encourage as many lower earners as possible to opt-in to their workplace scheme and take advantage of their employer’s contributions.”
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