New research highlights the pension gender gap
A large number of women face poverty in retirement because their savings do not measure up, according to research by the Association of British Insurers (ABI).
The report, entitled ‘The Gender Pensions Gap’, shows that 4.5 million working women do not save enough for retirement, and another 4.5 million do not save at all.
The pension system has come in for huge criticism in recent years, partly because savers are confused as to which policies to go for, and partly because a few examples where company collapses have cost workers their life savings.
Around 100,000 people contributing to pension schemes have lost all or part of their benefits after their employer became insolvent.
Women’s savings shortfall, coupled with the gender pay gap – currently running at about 18% for full time employees, adds up to a gloomy retirement for many female employees.
Joanne Segars, head of pensions and savings at the ABI, said: “The pressure on women today is immense.
“We are less likely to be in employment, we tend to have lower wages and we are more likely to spend our disposable income on our children. But increased pension saving is vital if women are to have a decent income in retirement.”
The report goes on to show that 35 per cent of women do not belong to a pension, compared to 25 per cent of men. The effect of such a gap takes its toll later in life with 83 per cent of retired women having a personal income of less than £1,000 per month, compared with 58 per cent of men.
The report also suggests a number of measures for employers as well as the Department for Work and Pensions, which is under growing pressure to improve the state system.
These include a review of complicated means testing, encouraging employers to contribute to employees’ pensions, especially women’s and better education on the subject, as only 3 per cent of women claiming they have a reasonable understanding of pensions.
Segars said, “Our research also shows that women want more information about what they need to do. All too frequently women say they know little or nothing about pensions. This low level of awareness is huge barrier to saving.
“Women are clearly at greater risk than men of facing poverty in their retirement. Women need more employer contributions and information and help should be more freely available.
“The saving industry, Government and employers must work together to help women save for a decent income in retirement.”