At the current rate of progression, it will take another 20 years to close the gender pensions gap.
This is what Scottish Widows workplace savings specialist Susan Hope told Money Marketing while discussing its latest women and retirement report 2024.
The report also says that the gender pensions gap will only close in 20 years if the government implements further policies encouraging women to save into a pension.
These policies include:
- Getting more women saving into a pension and qualifying for the full State Pension;
- Increasing the confidence women have to invest and manage their finance;
- A shift in approach to joint financial planning so that women do not lose out when annuities are purchased or in the event of divorce.
The report did highlight that “good progress in reducing the gender pensions gap over the last 20 years” has been made.
The gender pensions gap has reduced from 52% to 33% since 2008 for those aged 50-64, but women currently nearing retirement are still likely to have pension pots that are a third smaller than men.
Scottish Widows also predicts that, at the current rate, two million women in the UK feel like they will never be able to retire.
In order to make further positive changes, Hope believes collaboration is needed between regulation, the industry and employers.
Hope said this issue does not only impact women: “It affects everyone as everyone has women in their life.”
In regards to auto-enrolment, Hope said it has been “great”, but 43% of women do not feel confident enough to manage their own pension.
Additionally, issues remain that predominantly impact women. If a single mother works two jobs part-time and earns under £10,000 per job, she will not be eligible for auto-enrolment and miss out on a pension.
“So working mums can be hit.”
Scottish Widows head of pensions policy Pete Glancy said: “Within the pensions system, reforms to auto-enrolment could allow those working part-time, or juggling multiple jobs, to benefit from pension contributions, including contributions from their employer where they themselves are unable to save at that point in time.”
The report also looks at women’s attitude towards investment for the first time in the report’s 20-year history. It showed only 38% of women invest outside of pensions, compared to 55% of men.
This gap is exacerbated for young women as 34% of women aged 18-24 invest, compared to 64% of men aged 18-24.
Women are less likely to feel that investing is for people like them, and they are less likely to feel sufficiently supported to learn more about investing.
Still, more women aged 18-24 would consider investing if they had the right advice and resources. The most common cited barrier to investing was understanding potential risks and rewards better (36%) and access to official financial advice (31%).
Hope does feel the gap is “within our reach to close it”, but we need to take a “holistic” approach towards pensions.
Hope added: “The pensions gender pay gap belongs in the past; let us be the generation that makes it history.”
Glancy added that the government has announced a Pensions Review, where Scottish Widows believes Phase 2 of that review will have the gender pensions gap “within its scope”.
“This is the opportunity for all stakeholders who genuinely believe in gender pensions equality to contribute to that review, making the case for the reforms that will make a difference.”
My Pension Expert policy director Lily Megson said: “Yet again, we’re faced with damning evidence that British women are drawing the short straw when it comes to their pension planning.
“Targeted support from the government is therefore a must. Taking action through policy that boosts financial education, encourages active pension engagement, widens access to auto-enrolment and closes the gender pay gap is a vital step in empowering women to achieve the retirement they deserve.”
In order to obtain these results, Scottish Widows commissioned YouGov to survey 5,102 adults aged 18+.
YouGov also conducted a second survey to better understand investment behaviours and shifts in attitudes, with 3,650 adults aged 18+.
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