The first issue of the Friends Life Workplace Savings Index today revealed that women in most age groups have seen their pension contributions cut year on year. The rolling 12 month average pension contribution for women under 30 decreased by £2 to £128 a month, women aged 30 to 45 saw a £1 decrease to £213 a month and women aged 60 or more experienced a £2 decrease to £193 a month. Only women in the 45 to 60 age group saw an increase in average pension contributions, but this increase was lower than for men of the same age. All in all the decrease in contributions for women combined with rising inflation equates to an approximate decrease of five per cent in real terms. On average women’s contributions are 38% lower than men’s at £200 a month compared to £324.
The Friends Life Workplace Savings Index, powered by consumer insight specialist, DCisions, is a new quarterly report providing insight into long term saving based on data from workplace pension schemes run by Friends Life, which looks after the pension arrangements for over 20,000 organisations in the UK.
The first set of data to be released also revealed that men increased their contributions by £14 to £324 a month on average over the last 12 months, with men aged 45 to 60 making the largest average increase of £19, bringing average monthly contributions to £383 (1). As a whole, the rolling 12 month average pension contribution (for both men and women) rose by £9 over the last year, which is less than £1 a month, bringing the average contribution to £276 a month. This means the average contribution is trending in line with inflation, however these levels will not be sufficient when faced with the current lack of pensions savings in the UK and an ageing UK demographic.
Commenting on the findings, Martin Palmer, head of corporate benefits marketing at Friends Life, said:
"It looks like good news that on the whole individuals have weathered the economic storm to date and have maintained pension contributions, but when you look at the impact on contributions by age and gender a more concerning picture emerges, where the average contributions made by women have decreased in value. This is particularly concerning given that average contributions are already too low. When you consider wider pension reforms and the increase in state pension age women seemingly have a tougher challenge ahead than their male counterparts. It is vitally important that all customers, and especially women, focus on the long term to make adequate preparations for their retirement.
"The quarter two Friends Life Workplace Savings Index shows that overall pension contributions have increased year on year, but the increase is trending only in line with inflation, meaning in real terms individuals are not saving any more than they were 12 months ago. When you look at women’s contributions in isolation the net effect is a much worse five per cent decrease. To beat the well documented UK pensions savings crisis customers will need to make larger increases year on year to ensure their savings can support them financially in retirement, something that will be tough in light of other financial pressures including rising fuel and utility prices. As a nation we’re good at saving pounds and pennies by hunting for bargains but we need to ensure that savings happen for the long term and not just day to day living."
The quarter two Friends Life Workplace Savings Index also revealed:
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Risk levels for Friends Life corporate savings members decreased by 30 points in comparison to quarter one 2011, driven largely by customers in the ‘growth’ phase (more than 15 years to retirement). Friends Life customers on average experienced lower risk that the FTSE 100 index (2);
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Total returns were up 15% compared to quarter two 2010, slightly underperforming against the FTSE 100 but reflective of a lower average risk profile; those in the growth phase experienced highest gains due to high UK equity holdings (3);
Full details of the quarter two findings, including insight into all four areas of long term saving covered by the Friends Life Workplace savings Index (risk, returns, asset diversification and contribution levels) can be found in the attached report. The index is based on data from workplace pension schemes run by Friends Life. Anonymised customer data from over 700,000 of Friends Life’s pension customer accounts, is analysed by DCisions (4). Consumers are categorised in groups based on the length of time until they plan to retire and their age and gender to allow comparisons between consumer behaviour to be drawn.
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