The report has been tracking women’s retirement savings for two decades and in that time progress has been made in closing the gender pension gap – which is the difference in pension savings between men and women at retirement age. However, based on the current trajectory it will take another 20 years to close the gap. As it stands, the current average gap in pension savings at retirement shows women trailing men by about £100K.
Progress over the last two decades has been driven by policy implementations, an increase in the number of women in employment, a decrease in the gender wage gap* and a gradual shift in attitudes towards women’s roles. However, the gender pensions gap remains at a stubborn 30% in overall projected retirement income, with two fifths of women (42%) currently on track to face poverty in retirement compared to just over a third (35%) of men.
The average woman** is on track to only receive £12,000 per year of total income in today’s money during retirement, after paying for income tax and any expected housing expenses, compared to £17,000 for the average man. Not only is this difference considerable, it also leaves women falling short of meeting the Pensions and Lifetime Savings Association (PLSA) minimum retirement standards of £14,400 for a single person, while couples need £22,400 to cover all their basic needs.
The current ‘pension picture’ for women today…
Only 56% of women are on track to receive retirement income from a private pension, compared to 68% of men – and fewer (49%) women are on track for retirement income from long term savings than men (61%).
Two fifths (42%) of women are not on track for even a minimum lifestyle, compared to 35% of men. Women are less likely to attain a comfortable retirement lifestyle (28%) than men (35%) which the PLSA standards highlight as £43,100 per year for single individuals and £59,000 for couples.
While ONS data reveals a significant drop in the overall gender pension gap from 52% to 33% between women and men aged 50-64 since 2008, women in this age group are still likely to retire with private pension pots that are 33% smaller than men’s on average.
Policies drive change
Significant progress has been made in the past two decades as a result of active policy reforms that have enabled women to prepare better for retirement.
Auto-enrolment in 2012 effectively doubled pension participation rates of eligible female employees, resulting in an additional 4.6m women saving into a pension since its introduction. The gender gap in pension participation has effectively disappeared and younger generations of women will benefit from the additional time to save for retirement.
The establishment of shared parental leave in 2015 has had a positive impact on women’s ability to save for their futures.
Employers' requirement to publish gender pay gaps for businesses with 250+ employees from 2017 has also helped instigate a general shift in attitudes – with women’s employment rates increasing by 6% from 2003 to 2023 – and the gender pension gap falling from 25% to 14% in that same period.
Jackie Leiper, Managing Director, Scottish Widows, said: “Progress has been made on the gender pension gap over the last two decades thanks to game-changing interventions like auto-enrolment and improving equality on women’s pay and role in society. But we are still a long way from where we need to be. Without drastic action, the gender gap will take another 20 years to close, and there is a very real risk that we won’t see pension parity for many generations to come. Extending auto-enrolment to support the higher proportion of women who are self-employed, or in part-time work is vital, as is the establishment of a Lifetime Savings Commission. Urgent action must be taken and we must empower more women to take control of their money through life and into retirement, with education, support, and innovative ways to engage with their money. The last 20 years has seen a move towards gender parity on pensions – but there is still more work to do to ensure more women can live and enjoy the lives they want in retirement.”
Samia Longchambon, working with Scottish Widows on the launch of the Women and Retirement report, said: "Working, looking after children, and the busyness of day-to-day life can often mean we forget to take a step back and think about what life might look like in the future. I’ve been in the same job for almost 25 years so I’ve been lucky to have the stability of that. Whilst I’ve not reached retirement age yet, it’s definitely not too early for me to think about what life will be like in years to come. Scottish Widows research shows that it will be decades before men and women retire with the same amount of money. This means as women, the more we can engage with retirement, especially earlier in life, the better. The Pension Mirror is a good place to start though I can’t promise it will guess your age right!”
Women and Retirement Report from Scottish Widows.
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