Gender gap spells retirement difficulties for women

Just 5% of women in the UK are on track for the retirement they want

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  • Women are half as likely as men to be ready for the retirement they want
  • Just 29% of women feel confident about being able to retire when they want to
  • 61% of women admit to having never checked the performance of their retirement savings

Just 5% of women in the UK are on track for achieving the retirement they would like, versus 10% of men, according to new research from Aegon UK.

Aegon’s third UK Readiness Report reveals that there is still a considerable gap between men and women when it comes to being ready for the retirement they want. On average, women score 44 out of a possible 100, against an average score of 50 for men. Further still, women’s scores have dropped from an average of 50 in April 2014, despite huge changes to the pensions industry over the past year, which give people more flexibility when taking their pension and the wider introduction of auto-enrolment, the Government’s retirement saving program for workers.

Women also face the challenge of living on average four years longer than men with a life expectancy of 83 against 79 for men. To put this into perspective, an extra four years in retirement could cost around £60,000. On top of this, taking into account additional challenges women face such as career breaks when having a child and the pay gap, it is no surprise that less than a third (29%) feel confident about being able to retire when they want to.

Working women

The research also indicates that 64% of women don’t know how much their employer is contributing to their workplace pension. This is despite the fact that more than five million people have now been auto-enrolled into a pension scheme by their employer in an attempt to improve retirement readiness, and more than half (54%) of women consider their company pension to be their main method of saving for retirement. Women are saving £137 per month, which is around third of the £353 men are saving, and 61% admit to having never checked their retirement savings, versus 48% of men.

Angela Seymour-Jackson, Managing Director of Workplace at Aegon UK said:
“Women have a specific set of challenges when it comes to financially preparing for retirement. The gender pay-gap currently stands at 19.1% - so women are already on the back foot. If they then decide to cut down their hours for childcare purposes, they are not only taking an immediate pay hit, but it will have a domino effect on future income and savings. The Government has made significant changes in the past year to empower people in their retirement, but this is really a starting point. We now need to shift the focus to those who are saving and address specific needs, such as those of women. This includes enabling women to save as much as possible, when it matters, to better equip them for the future”

Tips:

  • Have a financial refresh – set out some time to get to grips with your financial plans. 58% of women admitted they don’t know which tax bracket they fall into – this can have implications not just for the immediate future, but also when you make decisions on how you will access your pension
  • Set up a monthly reminder – once you’re on top of your finances, dedicating just half an hour each month to checking on your savings will help ensure you’re making the most of your options
  • Consider alternative savings methods – on average women have saved or invested just half as much as men into ISAs for retirement (£5,370 versus £10,082)
  • Make the most of your existing savings – 35% of women said they’ve paid into more than one pension pot throughout their career. You can use the Pension Tracing Service to find ‘lost’ pensions for free online
  • Think about your retirement budget – Set out a clear idea of the basics you’ll need to budget for, as well as any additional aspirations for retirement, such as travelling or lending support to children or grandchildren