Women saving for retirement hits record high, but pensions gap means they're still saving much less than men

14 November 2019

Most women earning less than £20,000 are not saving enough for retirement, Scottish Widows says

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While the number of women saving for retirement has increased, the gender pay gap means men are still putting far more away overall, new research shows.

According to the 15th annual Scottish Widows Women and Retirement Report, the average savings amongst women have gone up 4.6% since 2007/08, which could equate to an additional £5,900 in retirement income each year.

The report shows that over the last 15 years, the number of women contributing something to a pension pot has risen by 14.6%.

However, men are still saving more overall, benefiting from an additional £78,000 in their pension at retirement on average.

Scottish Widows found that lower‐middle female earners have seen the smallest improvements in savings rates over the last decade, with just 47% of women earning between £10,000 and £20,000 saving enough for retirement.

This is compared to 65% of women earning £40,000 or more.

Many women in this lower‐middle earner group face competing demands on their income such as paying for childcare or saving for a property.

As women tend to earn less than men a larger proportion of their income will go towards paying for property.

Average house prices across England are 12 times the median salary of women, compared to eight times that of men, Scottish Widows says.

Financial pressures also mean some women are having to opt out entirely of their pension, often losing valuable employer contributions and tax relief.

Overall, the report found that women 57% of women were saving enough for their retirement, compared to 61% of men.

Jackie Leiper, distribution director at Scottish Widows, says: “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 over-come the challenges they face in saving for the future.”

Scottish Widows is calling for reforms to give more flexibility to those wishing to juggle the challenge of retirement savings, including penalty- free access to some of their pension savings in times of financial hardship and a default saving scheme for the self‐employed.

It also proposes employer contributions should also continue even when employees choose to opt‐out and limited access to pension funds to support a first home deposit.

Ms Leiper adds: “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.” 

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