The gender pension gap may be narrowing but the average woman would have to work beyond her 100th birthday to match the average men’s pension pot according to Scottish Widows’s latest Women and Retirement Report.
This annual survey found that the gender pension gap was now just 1 per cent – the narrowest on record. It found that almost six out of 10 women (59 per cent) were now saving enough to ensure a comfortable retirement. This figure is also the highest since Scottish Widows began compiling this report.
However it says that the persistent pay gap and the higher numbers of women in part-time work means that women saving adequately on the median wage are still saving £1,300 a year less than men.
This means for a woman to save the same amount into her pension as a man, she will need to work an extra 37 years.
The report found that younger women in particular were struggling to save. Just 46 per cent of those in their 20s are saving the recommended minimum 12 per cent of salary. This compares to 56 per cent of men the same age, and to almost two-thirds (64 per cent) of women in their 50s, showing that women do tend to save more as they get older.
However, not saving more while young means women miss out on the benefits of compound interest, which can help savings increase substantially over their working lives.
Automatic enrolment has been a huge driver in getting more women saving for the long-term, but Scottish Widows said there are still a number of structural challenges preventing a truly level playing field.
Women are still paid less than men, significantly impacting their ability to save. Of those in full-time jobs, men earn on average £6,100 more a year, a figure that increases to £10,800 for all employment types.
Extra commitments such as childcare also tend to fall on women, reducing the number of hours they are able to work and therefore limiting earnings. In 2020, three-quarters (75 per cent) of all part-time workers in the UK are women and the majority of UK families with a child under four consist of a father working full-time and a mother working part-time.
These challenges are likely to have been amplified by the pandemic as women are more likely to be working in shutdown industries, such as the hospitality trade, where many have been furloughed, seen their hours reduced or been made redundant.
Scottish Widows, managing director workplace savings, Jackie Leiper, says“While we’re heartened at the record levels of saving, there’s still a mountain to climb before we reach true gender pension parity.
“Until we can resolve structural inequalities, from the gender pay gap to the uneven division of labour at home, we will never have pension equality.”
She adds: “In a matter of months the pandemic is reversing years of progress. We’re calling for urgent pension reforms that will help more women save more for retirement, including improved childcare provisions, enhanced pensions for those on maternity leave, the inclusion of pensions in divorce proceedings, and the scrapping of the auto-enrolment minimum earnings threshold.”