Gender gap at record high as women put off saving for retirement

By CHRISTINE LAVELLE
Published on 22/10/2012 00:00

WOMEN are falling almost £30,000 behind men when it comes to saving for retirement, according to a new study.

The Scottish Widows Women and Pensions Report warned that the gender gap for retirement savings has reached a record high, as women are “disproportionately hit” by the economic downturn.

Nearly half of women said they feel worse off than a year ago, compared to 41 per cent of men, it said.

The report found the gender gap in retirement savings has increased by over 10 per cent in 12 months.

Women are saving an average of £720 a year less than men for use in old age, compared to £617 last year.

Scottish Widows said it means a 30-year-old woman who maintains this average annual rate of saving will face a shortfall of £27,600 in today’s money, compared to her male counterpart, if she chooses to retire at the age of 65.

The report also found that almost a quarter of women (24 per cent) are now failing to put anything aside for old age, compared to 16 per cent who were not saving last year.

In comparison, 14 per cent of men admitted to saving nothing for retirement.

Lynn Graves, head of Business Development for Corporate Pensions at Scottish Widows, said: “Important differences in lifestyle such as being more likely to work part-time or have a full-time caring role, mean women often find it more difficult to save for the long term and retirement.

“It has therefore never been more important for the pensions industry, government and employers to raise awareness of this gender gap in retirement savings and help women prioritise their pensions.”

The Scottish Widows report found that 24 per cent of women are prioritising debt repayments over saving for retirement, despite the average amount owed (excluding mortgages) dropping from £9,628 in 2011 to £7,092 this year.

Nearly a third of women said they would increase long-term saving to “save for a rainy day” and 34 per cent have prioritised living expenses above saving for old age in the last year, according to the report.

Ms Graves said: “This ‘rainy day’ attitude reveals that many women view their savings as a pot to dip into to cover unexpected costs at any time and not as a fund to be ring-fenced and protected for the future to pay for retirement.

“Although there is a clear need to balance everyday living costs with unexpected expenditure shocks, this can’t be at the expense of women protecting themselves in old age.

“The recession has had a major impact on people’s attitudes to managing their finances, as the messages to ‘live within your means’ has been hammered home.

“While women are right to focus on making sure their debts are manageable, other sacrifices may need to be made to ensure retirement planning is in place.”

Ros Altmann, director general at Saga, said “urgent reform” of state pensions is needed so that women get a fairer deal.

She added: “These figures are another worrying example of how women are still very much second-class citizens when it comes to pensions.

“They earn less than men and have fewer opportunities to save, and with more women being single in later life than ever before, they will not be able to rely on a partner’s pension.

“If they have not been able to save, or have saved too little, they risk either having to stay working or being pretty poor.”