British women saving for their retirement hits a fifteen-year high and they are saving more money as well.
The findings have been published in the 15th annual Scottish Widows Women and Retirement Report which shows that average savings amongst women are up 4.6% since 2007/08, equating to an additional £5,900 in income every year of retirement.
The Scottish Widows Women and Retirement Report monitors pension savings behaviour annually using the Scottish Widows Pensions Index and the Scottish Widows Average Savings Ratio.
The research was carried out online by YouGov across a total of 5,036 nationally representative adults in April 2019. 5,148 adults were surveyed in April 2018.
Gender pay gap
Despite a £78,000 gender pay gap in end of work retirement savings, more women are now saving more for their retirement.
Over the last fifteen years the number of women contributing something to a pension pot has risen by 14.6%, which far outstrips the rise in participation amongst men (8%) during the same period.
Despite this progress, the gender pay gap means that men are still putting away more money overall – benefiting from, on average, an additional £78,000 in their pension pot at retirement. This is the equivalent to 2.5 times the average household disposable income in the UK.
Although more than half (55%) do not feel that they are preparing adequately for their retirement, figures show that almost two-thirds are saving enough for their retirement.
While significant progress has been achieved thanks to auto‐enrolment, several groups of women remain under‐prepared for retirement.
There is still a significant number of mainly lower-middle earning women (37%) who are opting out of pensions savings to meet other current financial commitments.
Lower‐middle earners left behind
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 last decade.
Today, just 47% of women earning between £10,000 and £20,000 are saving enough for retirement compared to 65% of those earning £40,000 or more.
Valuable employers’ contribution
More than a third (37%) 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.
Women in this lower‐middle earner group face competing demands on their income such as paying for childcare or saving for a property, with seven in 10 likely to face financial difficulties.
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% 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% of an average woman’s income, compared to 28% for men.
All of these challenges are compounded by the issue of disengagement: four in 10 women (42%) remain in the dark about how much they are actually saving for retirement and more than half (55%) have doubts that they are putting aside enough money.
New ways to save
Women have 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.
Jackie Leiper, Distribution Director at Scottish Widows, explained that the company wants to 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 this, Scottish Widows believes that the financial stresses of life that disproportionately impact women, such as those that go alongside life events including starting a family and buying a first home can be eased.
The overall progress seen in the number of women saving is consistent across the UK.
In 2007/08 Londoners were least likely to be saving adequately – just 37% did. The last 11 years have, however, seen an 18% increase in the proportion of women saving adequately in the capital to reach 55% today.
Scottish women, who were the country’s best female savers in 2007/08, continue to lead the rest of the UK, with just over 60% setting aside enough for a comfortable retirement.
Image by silviarita from Pixabay