The Gender Divide in Retirement

Back to results

According to our 2016 Readiness Report, women are still significantly behind men when it comes to being prepared for their retirement. The UK’s average readiness score is currently sitting at 51. However, while men have a readiness score of 54, women have an average readiness score of just 49. On first glance, it might not seem like the gap is as wide as you might expect. After all, as we explain below, women have had a lot of catching up to do over the years, but there is certainly still work to be done.

How ready are you for retirement?

Pensions have graced the cover of almost every newspaper in the UK in the past 12 months, and there have certainly been a significant amount of column inches dedicated to the topic. But, the problem remains. Lack of preparation for retirement in women certainly has roots in previous employment patterns and social norms, and women are still more likely to have career breaks than men to care for family. However, there is also a lack of pension awareness across both men and women and a need for change.

Traditionally, women have relied on a spouse to provide for their retirement, but in today’s age of independence and equality, there is a need for women to take responsibility for building up their own pension pot. People reaching State Pension Age after 5 April 2016, will build up a State Pension based on their own national insurance contribution record, and apart from some complex transitional arrangements, it won’t be possible to inherit a spouse’s pension. It is increasingly important that both government and industry make a concerted effort to further encourage women to plan for life after work. Currently, women on average tend to live 3.7 years longer than men and they will need to make sure they have an adequate retirement income to live on.

Our Readiness report research shows that women typically aim to retire aged 64, which is problematic given that by 2020, the state pension age for women will have risen to 66, if they don’t have private pension savings to fill the gap.

Do you know the value of your pension pot?

When was the last time you checked on your retirement savings? Shockingly, we found that almost half (48%) of women had never checked in on their pension pot. There aren’t many things in life that someone might feel comfortable starting, paying into and then overlooking entirely, so it is somewhat peculiar that so many of us - men and women - do just that with our pension pots.

Putting your needs first: The reality of retirement planning

Of course, stopping paying into your pension entirely is an even more perilous strategy. Kids are expensive, that’s for sure, and they often cost much more than many of us anticipate. While cutting pension contributions might seem like an attractive option when facing the financial challenges of raising children, in actual fact, it can affect your retirement in a big way.

Gaps in a National Insurance Contributions by taking time out of work could affect your state pension, and if there is no private pension in place, the possibility of a retirement income could virtually disappear. It’s worth finding out whether you have any gaps in your national insurance record and doing something about it. It may be wise for women to think about paying voluntary National insurance Contributions to achieve the minimum of 10 qualifying years for a state pension or top up to 35 years to maximise their New State Pension. This needs to be done before your State Pension Age so don’t leave it too late.

In the end, it comes down to a combination of affordability and awareness. While 39% of women admit that the biggest barrier to checking their pension is a lack of understanding, 30% of men feel the same.

55% of the UK public have taken a career break of at least a year at some point in their life, while 15% have taken extended periods of time off work for maternity or paternity leave impacting the amount they can save in a pension. Taking time out of the workplace means people will need to make up for lost time and increase their savings to achieve the retirement income they aspire to.

It’s crucial that we appreciate the pressures that many families are under and that, regardless of gender, people feel supported and informed when making decisions that may affect their future. While getting to grips with your pension might be a bit daunting for some, the implications of choosing to ignore your pension pot are not for the faint hearted.

Take a look at our 2016 readiness report to find out more; it makes for a very interesting read. The UK is getting better at preparing for retirement, but we have a long way to go and we look forward to seeing more positive changes in the coming year.