10th December 2012

Women & Pensions report

The gap between the amount men and women are saving for retirement has grown to a record high, as women continue to be hit disproportionately by the economic downturn, according to the eighth annual Scottish Widows Women and Pensions Report.   

Half of women report feeling worse off than a year ago (compared to 45% of men). The report finds that the gender gap in retirement savings has increased by over 10% in 12 months. In terms of savings put aside for retirement, women are now saving an average of £776 per year less than men for use in old age – significantly higher than the £700 gender gap recorded last year. This means that a 30 year-old woman who maintains this average annual rate of saving will face a shortfall of £29,800 in today’s money, compared to her male counterpart, if she chooses to retire at 65 years-old.

Based on a sample of 5,200 adults, the report found that the number of women saving nothing at all for retirement has also increased since last year. Over a quarter of women (26%) are now failing to put anything aside for old age, compared to 23% of women who reported not saving last year. In comparison, just under a fifth (19%) of men admit to saving nothing for retirement.

Debts taking their toll on retirement savings

A third of women (31%) are prioritising debt repayments over saving for their retirement, with the average amount owed (excluding mortgages) jumping significantly from £10,174 last year to £10,922 this year. In line with this, retirement savings rates amongst women have dropped alarmingly in the past 12 months, as a result of the need to repay short-term debt. Since last year, the average monthly saving has fallen steeply from £130 to £95 for women, whilst the average for men has risen from £174 to £185 during the same timeframe.

Commitment to save prevails despite tough climate

As many Britons continue to face pressure on household finances amid wider economic uncertainty, it is clear that long-term saving is being side-lined by many women in favour of a more short-term approach; 42% of women have prioritised living expenses above saving for old age in the last year. Further proving that retirement is not a top priority for many women today, the most popular reason for increasing long-term saving is to ‘save for a rainy day’, with 31% of women citing this.

However, this year’s report also showed a positive shift in attitudes amongst women who are already saving into pensions, many of whom are reluctant to cut their contributions.

In addition to this, women are also well aware of the need to save for their old age, with 28% of those surveyed who plan to save more over the next 12 months doing so because they want to save more for their retirement.

You can download the full report at www.scottishwidows.co.uk/reports

Pensions