‘Sleep-walking into poverty’ as women fail to save for retirement

NEARLY half of women aged 40 and over who are living with a partner have no pension of their own and stand to lose out in retirement, a report out today warns.

The survey claimed many “forty-something” couples are “sleep-walking into retirement poverty” as they have no idea how much cash they will need to live on.

More than half of couples aged over 40 have not worked out how much money they will need to live on in retirement, with two in five admitting to having no financial plans in place for life after work.

The study also found that couples seem reluctant to discuss the finances that will support them in later life. One in five couples admits to never having discussed joint retirement financial planning, while only half of those who have already retired made a joint decision about the annuity they bought.

Vince Smith-Hughes, head of business development at insurance and pensions firm Prudential, which carried out the survey, said: “Pensions may not seem like the most exciting topic for a couple in their 40s to be discussing, but couples who have not put time aside to discuss their retirement income plans run the risk of spending their later lives worse off than they had expected.

“Women who think they can rely on their other half’s pension income without having discussed retirement plans with their partner – and preferably with a financial adviser, too – could find themselves in financial trouble, especially if they outlive their loved one. Sitting down together and working out what you will need to live on is an important part of making the right provision for the future.”

He added: “People may feel they can’t afford to significantly boost their retirement savings in the current financial climate, but taking even the smallest of steps can have a positive impact. “Joining a workplace pension scheme, considering a joint life annuity, so the income will continue after one partner dies, and topping up national insurance contributions, are all options which can increase income in retirement. These crucial issues should be discussed between couples and, in turn, with their financial advisers.”

The survey comes despite figures published yesterday by Edinburgh-based pensions provider Scottish Widows showing the number of women saving adequately for retirement has hit a seven-year high. Half of women put away enough cash to help them through their twilight years, up from 43 per cent last year.

The findings showed women are putting aside on average 12.9 per cent of their income, including any employer pension contributions. Men by comparison are saving less, 12.6 per cent of their income. However, men are able to save significantly more for retirement as they typically earn higher salaries – £28,091 for men compared to £22,490 for women.

Ian Naismith, head of pensions market development at Scottish Widows, said: “It is encouraging to see a positive step change in the number of women saving adequately for retirement, especially given the challenging economic climate, but the gender gap still exists.

“Many women will spend a proportion of their career working part-time and will also face challenges of lower pay, higher childcare cost and growing unemployment so, despite their best efforts, this will have a knock on effect on their financial decisions and saving for retirement.”