While the gap is startling, the research highlights an encouraging overall trend that the value of women’s pension pots is increasing. In April 2015 women had just £16,700 saved in pensions, this increased to £20,400 in 2016 and has again risen to the £24,900 women have today. A number of initiatives are behind this, including the ongoing roll–out of workplace auto-enrolment, the introduction of the pension freedoms, and the fear that pension tax relief could be reduced but it may also be that women are becoming increasingly aware of the need to provide for later life. Over the same time period women’s ISA savings, specifically for retirement, have jumped from £5,4001 to £14,900.
The pension freedoms, introduced in April 2015, gave people with defined contribution pensions the ability to access their pension savings and use the money in any way they choose from age 55 and are known to be having a positive impact. As a direct result of reforms 13% of women are saving more into their pension and 14% have realised that they need to plan more for retirement.
However, it’s the level of engagement where women are falling down. Over two fifths (42%) have never reviewed or taken any action that affects their plans for retirement and just a fifth (19%) have engaged in the last six months. This is well below the levels of men, a quarter (24%) of whom have checked or amended their pension plan in the last six months. This is perhaps why over a third of women (35%) have absolutely no idea how much they have saved in their pension.
Looking at the barriers which prevent women from checking in on their pension savings, over a quarter (27%) say they don’t understand the information provided, 13% believe there is a lack of online services or information and 11% avoid checking their pension savings because they fear seeing how little they have saved.
Kate Smith, Head of Pensions at Aegon said: “It can’t go unnoticed that women have made some encouraging steps forward in saving for retirement. However, the difference between men’s and women’s pension savings is stark and there are a number of reasons behind the widening pension savings gender gap. Auto-enrolment has successfully introduced 7.6million[3] people to workplace pensions but the gender pay gap, which is currently 13.9%[4], means that men are effectively saving more without even thinking about it.
“Women often face a more disrupted savings journey due to maternity leave and working part time, juggling a career and children, so it’s crucial that they actively engage with their pension savings – burying heads in the sand is simply not an option. So it’s concerning that over a third of women in the UK don’t know how much they have saved in their pension. Without this vital information it’s impossible to know what to do next. Knowledge is power after all, and the more they do now to build up their pension knowledge the better their retirement will be.
“Gaps in pension savings history can leave you worse off in retirement but for most women it’s unavoidable. As long as women are having babies, they will always be on the back foot when it comes to pension savings. For example, taking a full year off work on maternity leave and stopping or reducing pension contributions to a workplace pension could lead to women needing to work longer to make-up the shortfall. However, with the right preparation, arrangements can be made to fill the gap before it’s too late.”
“The pension dashboard, due to be introduced in 2019, where people will be able to see all their pensions in one place should help to spark more interest in pensions. But women shouldn’t wait two years before taking any action.
“Both the industry and employers have an important role to play in making pensions more accessible for women right now, be that through providing online tools, supporting those who want to review their pension savings during working hours or encouraging engagement with professional advisers.”
Kate’s top tips to engaging with pension savings:
Don’t delay. Start saving as early as possible. Make a plan, including all your pensions and savings
Don’t opt out of your workplace pension. Save enough to maximise your employer’s pension contribution
Work out how much you’ve saved in pensions and other savings you’ve targeted for retirement, such as ISAs.
Get a State pension forecast online https://www.gov.uk/check-state-pension or call the Future Pensions Centre helpline on 0345 3000 168
Work out what retirement income you need. Use online tools and calculators such as: https://retiready.co.uk/retirement-income-planner.html
If you are in your scheme’s default fund, do your research and consider selecting your own funds
Regularly review your plan, your pension and savings accounts. This especially important for women returning to work from maternity leave and those whose children have reached school age, when nursery and childcare costs are no longer an expense
Get professional financial advice.
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