While men are more likely to have a pension than women, a recent Aviva survey showed that more women than men have short-term savings. This emphasises that the challenge for our industry isn’t just to get people saving; it’s to get them, in particular women, to save differently.
Of the women who said they didn’t have a workplace pension, one in five said it was because their employer didn’t offer one. Auto-enrolment will help address this issue by providing a savings vehicle. But, I feel that there is still some way to go to engage women so that they don’t opt out. And, we need to encourage them to contribute more than the minimum.
So why do men and women save differently? There are lots of different reasons why women are less likely to save for retirement than men. It could be that there is something in the complexity of long versus short-term savings products that divides the sexes. It could be because there are deeply rooted social norms that place the responsibility for the long-term pension provision with men. Or, perhaps it could be down to the different working lives of men and women.
With so many possible reasons for the lack of longer term savings for women, and no way of addressing these concerns individually, I propose we focus on a solution. As an industry, it is our responsibility to engage with people so they understand the purpose and importance of long-term savings products. I would suggest that many in our industry think that we do that already, but the facts speak for themselves. We are not saving enough for our retirement.
Recent statistics from the ONS show that one in eight women are working past the age of 70, compared to one in ten men. This is often a direct result of not saving for retirement in their earlier working life.
I think that for many, and especially the women affected, this would not be the case had they understood earlier in their working lives the importance of saving for their retirement.
Engagement is a word that is often bandied around. But sometimes this only takes the form of a yearly statement, and not much more. And, projection values on statements are clearly not enough to engage scheme members.
Engagement is a word that is often bandied around. But sometimes this only takes the form of a yearly statement, and not much more
But as an industry, we’re moving in the right direction with the emergence of a variety of financial tools, planners and databases. The key is to make these tools relevant and helpful to users so they are used regularly, and add value to the individual’s financial planning.
Interactive online planning tools need to help members of workplace savings schemes plan for both their long and short-term financial goals. They need to break savings down so it’s clear that to have an adequate retirement fund, a yearly saving of ’X’ must be made. Input to tools needs to be personal, so users can reflect their own family situation to get personalised outputs.
Making real what kind of income people, and specifically women, can expect in retirement is where I see our industry adding real value to people’s lives.
Auto-enrolment and providing a workplace pension is one thing. But the opportunity to engage people so everyone understands the importance of, and takes responsibility for saving enough for their retirement is one that we shouldn’t pass up.
The responsibility for retirement saving ultimately rests with the individual. But over the years, our industry has done its utmost to mystify pensions to the point where it is very hard for people to engage with them.
If we start to clarify the situation and unwind some of that confusion through proper and meaningful engagement, wouldn’t that be a job well done?