Men have almost three times the pension savings of women, according to the latest research from Aegon.
The average man has pension savings worth £73,600, compared to £24,900 for the typical woman.
The good news however, is that the amount that women are putting away is growing. In 2015, the average woman had just £16,700 saved for retirement, which had grown to £20,400 in 2016.
The steady increase in female savings has been attributed to auto-enrolment (where employees are automatically being joined into workplace pensions) and the pension freedoms, which allow savers to use their pension as they wish from age 55. The research found that 13% of women are paying more into their pensions as a result of the change in rules.
Aegon also suggested that women are also becoming more aware of the need to save for retirement. Since 2015, the amount of money women have earmarked for retirement in Isas has also increased from £5,400 in 2015 to £14,900 today.
However, while increasing savings levels are encouraging, Kate Smith, head of pensions at Aegon, says women are still on the back foot. “It can’t go unnoticed that women have made some encouraging steps forward in saving for retirement. However, the difference between men’s and women’s pension savings is stark and there are a number of reasons behind the widening pension savings gender gap. Auto-enrolment has successfully introduced 7.6 million people to workplace pensions but the gender pay gap, which is currently 13.9% means that men are effectively saving more without even thinking about it.”
Close to half of women don’t review their pension savings
The research also found that while women were putting more money away, many were not engaging with their savings. Close to half of women (42%) have never reviewed their pension and only one-fifth have looked at it in the last six months. This compares to a quarter of men who have reviewed their pension in the last six months. It’s not surprising then that 35% of women do not know what their pension is worth.
Ms Smith adds: “Women often face a more disrupted savings journey due to maternity leave and working part time, juggling a career and children, so it’s crucial that they actively engage with their pension savings – burying heads in the sand is simply not an option.
“It’s concerning that over a third of women in the UK don’t know how much they have saved in their pension. Without this vital information it’s impossible to know what to do next. Knowledge is power after all, and the more they do now to build up their pension knowledge the better their retirement will be.
“Gaps in pension savings history can leave you worse off in retirement but for most women it’s unavoidable. As long as women are having babies, they will always be on the back foot when it comes to pension savings. For example, taking a full year off work on maternity leave and stopping or reducing pension contributions to a workplace pension could lead to women needing to work longer to make-up the shortfall. However, with the right preparation, arrangements can be made to fill the gap before it’s too late.”
Ms Smith says it’s vital women don’t delay pension saving and ensure that they remain in their workplace scheme, saving enough to maximise their employer’s contribution. Women should also make the most of online tools and calculators that will enable them to work out how much money they will need when they retire and how much they will need to save to achieve that goal. All women should also find out how much state pension they will be entitled to and at what age they will be able to start claiming. For more information visit https://www.gov.uk/check-state-pension