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Why women can&#39t get in step with pensions

Up to 4.5 million working women do not save enough for retirement and another 4.5 million women are not saving at all.

The facts about women and retirement are brought together for the first time in an ABI report, The Gender Pensions Gap – Encouraging Women to Save for Retirement.

It is rare these days to see a good news story about pensions but there have been any number of bad stories – occupational pension schemes going bust, people simply not saving in pensions and increased reliance on complex means-tested benefits.

All of this has serious implications for tomorrow&#39s pensioners. Research commissioned by the ABI identified a total savings gap worth £27bn. This has implications for all future pensioners but in particular for women, who make up most of the gap.

It would be wrong to suggest that there have not been any improvements in pension provision for women in recent years, for example, the state second pension, stakeholder pensions and sharing pensions on divorce. Despite this, we still have a gender pension gap.

We all understand the gender pay gap but we want to highlight the gender pension gap which is just as wide and just as important. Both affect the level of women&#39s income and we believe the pension gap needs to be addressed.

The pressure on women today is immense. Women are less likely to be in employment, tend to earn a lower wage and are more likely to spend disposable income on children. But pension saving is vital if women are to have a decent income in retirement.

ABI research has found that 35 per cent of women do not belong to a pension scheme compared with 25 per cent of men. Over half of all women contribute less than £100 a month to their pension and women are less likely to benefit from employer contributions. The result is that 83 per cent of retired women have a total personal income of less than £1,000 a month.

Women are at greater risk of facing poverty in retirement. A two-pronged approach is needed to improve women&#39s income in retirement.

First, we need to ensure that the state pension provides a solid foundation on which to build private saving but this can only be part of the solution.

The amount that people save is the single most important factor in determining their income in retirement and encouraging women to save more or providing help to make pensions more affordable are the best ways to improve income in retirement.

We recognise that there is a challenge for the insurance industry. It needs to look at developing products and the types of service which meet the particular needs, lifestyles and employment patterns of women.

We also need to develop effective ways of reaching women, providing information about the need to save and the risks of not saving.

Under the Raising Standards initiative, the industry has improved the infor-mation provided by accredited firms. It is clearer, simpler and easier for consumers to understand. We know from our research that one of the main things that women want is clearer information about pensions.

The industry is working with other organisations, the FSA and the Government in a bid to build awareness about the need to save for retirement.

One example is the pension calculator set up by the ABI and the FSA in 2002 which enables individuals to work out how much they need to save to achieve the kind of income they would like in retirement.

There is much more that can be done. The industry, the Government and employers must continue to work tog-ether to encourage women to save more and to offer products and services which meet the needs of women.

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