Women have barely a third the pension savings of men, with their average pot just £24,900 compared to the £73,600 held by males, new research has found.
But women’s pension pots are increasing steadily, up from £16,700 in April 2015 to £20,400 in April 2016 and £24,900 today, spurred on by auto-enrolment, the introduction of pension freedoms and the fear that pension tax relief could be reduced, according to Aegon’s Readiness Report.
Women’s Isa savings specifically for retirement have jumped from £5,400 in 2015 to £14,900 today.
Britons have an average of £49,988 saved in a pension, up from £35,614 in 2016 and £28,766 in April 2015, according to the report.
The report claims that the introduction of pension freedoms in April 2015 has directly led to 13 per cent of women saving more into their pension and 14 per cent realising that they need to plan more for retirement.
A lack of engagement
Aegon says it is the level of engagement with pension saving that is leaving women short, with 42 per cent having never reviewed or taken any action that affects their plans for retirement.
19 per cent of women have engaged with their pension in the last six months by checking or amending their plans, compared to 24 per cent of men.
Aegon head of pensions Kate Smith says: “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 7.6m people to workplace pensions but the gender pay gap, which is currently 13.9 per cent, 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.”