Women saving for retirement at record high but £78,000 gender savings gap remains

Majority of women earning under £20,000 are not putting enough aside for retirement, research reveals.

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

According to the 15th annual Scottish Widows Women and Retirement Report, the average savings among women has 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 past 15 years, the number of women contributing 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 lowermiddle female earners have seen the smallest improvements in savings rates over the past 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 lowermiddle 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 goes 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 that some women are having to opt out of their pension, often losing valuable employer contributions and tax relief.

Overall, the report found that 57% of women were saving enough for their retirement, compared with 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 lowermiddle income women, need more support to overcome 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 selfemployed.

It also proposes employer contributions should continue even when employees choose to optout 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 autoenrolment, 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.” 

This article was first written by our sister magazine Moneywise.

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