Over the past 15 years, UK savers have become more prepared for their retirement, but there are still significant gender gaps according to new research.
Scottish Widows found that more than one in three (37 per cent) women on ‘lower-middle’ earnings are opting out of workplace pension because of other financial commitments.
Its research found that less than half (47 per cent) of these women — earning between £10,000 and £20,000 — are saving enough for retirement . This compares with two-thirds (65 per cent) of those earning £40,000 or more.
Overall the research, found that men more likely to be saving enough for their later years than women. In total more than half (57 per cent) of women are deemed to be saving adequately, compared three in five men (61 per cent).
These percentages are the highest recorded in the 15 years of the annual Scottish Widows Women and Retirement Report.People were deemed to be saving adequately if the equivalent of at least 12 per cent of their income was going into their retirement pot.
However, Scottish Widows said that despite these positive findings there was evidence of only ‘small improvements’ in savings rates among lower earning females.
Scottish Widows said women across all income brackets faced competing demand on their take home pay, with rising childcare costs and housing costs. This problem is exacerbated for women who typically earn less than men.
It pointed out that average house prices in England are 12 times women’s wages on average, compared with eight times the amounts men typically earn.
It said median average rents in England consume 43 per cent of a typical income for a woman, compared with 28 per cent for men.
Some women saw no other option than opting out of their workplace pension to manage their day-to-day cash flow – meaning they would miss out on “free money” into their pension from employer contributions and tax relief.
Scottish Widows distribution director Jackie Leiper 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 lower-middle income women, need more support to overcome the challenges they face in saving for the future.”
The People’s Pension director of policy Gregg McClymont, director of policy at The People’s Pension adds: “These findings are further evidence of a stark and worrying gender pensions gap. With the average female pensioner £7,000 a year worse off than a man the same age , it’s something we cannot and should not ignore.
“Tweaks to auto-enrolment policy will help reduce this gap but if we’re going to really tackle gender pensions inequality, we need to look at the motherhood penalty women face when they have children.
“To look after their children, women often reduce their working hours or stop working altogether for a period and their rates of pay and potential for progression can be unfairly affected, which mean their pension savings also take a hit.
“While many women choose to change their working lives because they want to spend more time with their kids, our research is clear that the high cost of childcare is also a key factor.”
As a result he says The People’s Pensions was calling on the next government to introduce a package of measures to address this inequality.
“It must recognise that caring is an economic activity which should attract workplace pensions contributions; lower the threshold at which auto-enrolment kicks in to the National Insurance trigger to bring in nearly half a million new pension savers – three-quarters of whom would be women; and future proof the guaranteed 30 hours per week childcare for all three and four year olds policy, by funding it via a specific ear-marked grant to local authorities.”