You are here: Home - Retirement - Retirement planning - News -

Women face £185k gender pension gap

Written by: Emma Lunn
Young women need to save an extra £185,000 to reach the same retirement income as men, according to Scottish Widows.

The retirement specialists found that women will need £100,000 to bridge the savings gap, another £50,000 to cover longer life expectancy and £35,000 to pay for associated care needs. This means women need to save £210 more a month from the age 25 until the day they retire.

Scottish Widows’ Women & Retirement report has been running each year since 2006. This year’s study found that women currently in their 20s will have only saved around £250,000 by the time they retire. Men on the other hand will have closer to £350,000 on average.

Added to this, a 25-year-old man today will live to 86 based on current estimates, while a woman can expect to reach the age of 89. With women living three years longer than men, the average woman will need £400,000 in her pension pot to achieve the same level of retirement income as a man with £350,000.

With longer lives comes a greater need for care in older age. Estimates suggest women spend on average 460 days in care homes, while men spend just 100. With the average cost of care £679 a week, this means women can expect to spend £35,000 more than men.

Overall, this means women need to save an extra £185,000 to achieve the same retirement lifestyle as a man. This would require saving an extra £2,500 per year, or £210 every month, from their mid-20s until retirement.

Jackie Leiper, managing director of workplace savings at Scottish Widows, said: “It’s well known that the gender pay gap has a damaging impact on women’s retirement prospects. But women face a double whammy: even if we close the pension saving gender gap, pension equality would still not be achieved, because women need to fund a longer retirement and spend more on associated care costs.

“There are ways to help level the playing field – from enhancing maternity pensions to offering better parental leave and financial support for childcare – so that women are no longer financially penalised for raising a family. Of course, we must also tackle the larger structural issues in our society, like the gender pay gap.”

Jenny Ross, Which? Money editor, said: “These worrying findings reflect Which?’s previous research, which has shown that women face big disparities compared to men when it comes to saving for retirement, with mothers particularly at risk of retiring with smaller pension pots.

“To help address this pension gender gap, Which? recommends that the government should make a lump sum contribution to the pensions of first-time mothers.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

How to get 5% interest without tying up your savings for years

You don't have to lock your money away to get an above-average return on your savings.
How to get 5% interest without tying up your savings for years

Top savings accounts now pay over 4%

Savers can now access interest rates of over 4%, following the Bank of England’s decision to increase the base...
Top savings accounts now pay over 4%

Friday 30 September: Three deadlines you can’t afford to miss

It’s the end of the month today and this date is significant for energy billpayers, anyone with notes lying ar...
Friday 30 September: Three deadlines you can’t afford to miss

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week