This is due to a £100,000 difference between what men and women have to live on at retirement, which at its current rate will not be fixed for another two decades, according to the Women and Retirement Report from Scottish Widows.
That represents a 30% gap in what men and women have once they reach state pension age.
As it stands, over two-fifths (42%) of women are on track to live in poverty once they stop working, whereas a third of men (35%) are set to experience poverty.
During retirement, women are forecast to receive £12,000 per year in income during retirement once income tax and housing costs are factored in, with men having £17,000 on average.
This leaves a shortfall of £2,400 to cover basic needs for women who are not in a couple, as per the Pensions and Lifetime Savings Association’s defined minimum retirement standards.
Wellness and wellbeing holidays: Travel insurance is essential for your peace of mind
Out of the pandemic lockdowns, there’s a greater emphasis on wellbeing and wellness, with
Sponsored by Post Office
The way women build up their retirement pot also hampers the amount they can live on after they retire. Over three-fifths of men are able to build up long-term savings to rely on post-working life, but just 49% of women are on track to do so.
Meanwhile, what women can build up in their pension pot is also hampered by the amount they can contribute through their salary to their retirement kitty.
There is still a gender pay gap between men and women of 7% for full-time posts, which rises to 13% when both full- and part-time employees are taken into account.
The full-time (minimum of 30 paid hours) median hourly earnings for men, without overtime considered, was £19.24 – for women, this was £17.88.
However, for part-time employees, the median pay is £13 per hour for men and £13.40 for women.
While the pay gap has marginally dropped in 2024, the rate of change described by Paul Nowak, general secretary of the Trades Union Congress (TUC), as closing “at a snail’s pace”.
The auto-enrolment of pensions introduced in 2012 has doubled the number of women who contribute to their pot and has significantly reduced the pension participation gap.
Further, women will soon be able to start their pension planning earlier when the scheme is expanded to include all employees aged over 18 years old (previously 22) and the lower earning limit is scrapped. This has passed its third reading in Parliament, but no set date for the new law has been confirmed.
However, the pace at which the gap in what women and men have at retirement age needs to speed up, according to Jackie Leiper, managing director of Scottish Widows.
‘Long way from where we need to be’
Leiper said: “Progress has been made on the gender pension gap over the last two decades thanks to game-changing interventions like auto-enrolment and improving equality on women’s pay and role in society.
“But we are still a long way from where we need to be. Without drastic action, the gender gap will take another 20 years to close, and there is a very real risk that we won’t see pension parity for many generations to come.”
Leiper added: “Extending auto-enrolment to support the higher proportion of women who are self-employed or in part-time work is vital, as is the establishment of a Lifetime Savings Commission. Urgent action must be taken and we must empower more women to take control of their money through life and into retirement, with education, support, and innovative ways to engage with their money.
“The last 20 years has seen a move towards gender parity on pensions – but there is still more work to do to ensure more women can live and enjoy the lives they want in retirement.”
