Women saving for retirement hits record high despite £78,000 gender gap
But the 15th annual Scottish Widows Women and Retirement Report shows that men are still putting away more money overall – benefiting from, on average, an additional £78,000 in their pension pot at retirement.
The report found that the number of women contributing something to a pension pot has risen by 14.6 per cent over the past 15 years, far outstripping the rise in participation amongst men (8 per cent) during the same period.
The average savings amongst women are up 4.6 per cent since 2007/08, equating to an additional £5,900 in income every year of retirement.
Lower-middle earners left behind
While significant progress has been achieved thanks to auto-enrolment, several groups of women remain under-prepared for retirement. Lower-middle female earners, for example those working in supermarkets, call centres, nurseries and care homes, are still feeling the pinch, having seen the smallest improvements in savings rates over the past decade.
Scottish Widows found that just 47 per cent of women earning between £10,000 and £20,000 are saving enough for retirement compared to 65 per cent of those earning £40,000 or more.
More than a third (37 per cent) see no other option but to opt out of their pension scheme to manage cash flow, meaning they lose out on valuable employer contributions and tax relief.
Life milestones such as having a family or buying a first home, which should be positive steps, can also cause financial stress and hinder the ability to save. Pension contributions stop after 39 weeks on maternity leave, and those who are trying to juggle work with childcare commitments often work part-time – 75 per cent of these workers are women.
When it comes to housing, women face a much greater affordability challenge than men, driven primarily by differences in income. Average house prices across England are 12 times the median salary of women, compared to eight times that of men; median rents in England consume 43 per cent of an average woman’s income, compared to 28 per cent for men.
Jackie Leiper, distribution director at Scottish Widows, said: “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 overcome the challenges they face in saving for the future.
“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.”
The motherhood penalty
Gareth Shaw, head of money at Which?, said: “We know from our research that the motherhood pension penalty is leaving women significantly worse off in their retirement, and may leave mothers working part-time saving around £15,000 less over their careers than women working full-time.
“If the next government is committed to closing the pensions gender gap, it should make a contribution to the pensions of first-time parents to ensure they can retire with an adequate pension pot.”