Too many cases have made headlines recently regarding women’s pension shortcomings and the gender pay gap.
A report by Aegon last year found that just 10 per cent of women are prepared for retirement based on their current savings. On average, women have £20,000 saved into a pension plan in comparison to an average of £52,000 among men.
While women’s work patterns have remained fairly similar for a considerable number of years, I cannot help but ask: why are so many still failing to find a solution to adequate pension saving?
For decades, a large number of women have fallen victim to the ‘triple effect’, being a combination of lower salaries, career breaks and smaller contribution rates, which leads to insufficient income at retirement.
The Zurich Workplace Savings Barometer, which analysed over 250,000 pension plans, found that employer contributions are generally lower for women’s pensions than men’s, resulting from the gender pay gap, career breaks and men working in larger businesses.
From this, Zurich claimed that women could encounter a pensions shortfall of £47,000 at the end of their working life if the gender gap in employer contributions is not addressed.
In addition, many have missed out on auto-enrolment pension saving as a result of having more than one job. Although the government has confirmed its plan to consider this issue in its auto-enrolment review later this year, it is essential that women are provided with greater information or seek guidance on how to ensure they are saving enough. There is most definitely a need for the government, employers and members to be active rather than reactive when it comes to saving for retirement.
With the introduction of the Pensions Advice Allowance, employers should work to encourage women to take the tax-free money for financial advice earlier rather than later, preferably, considerably in advance of their pensionable age, so that they can develop an effective savings plan for a comfortable retirement.
Zurich Insurance head of new retail distribution Rose St Louis says: “Workplace engagement and guidance has a central role to play in helping women make the most of their saving potential while they are working full time, but it is now crucial to focus on ensuring that this gap is not allowed to grow any further.”
While women have worked to gain a position of independence and equality in the workplace and society, they must take action to ensure that they do not resort to historic traditional gender roles in retirement. When it comes to financial planning, pension saving must also hold precedence so women are not left relying on their male counterparts or individually suffering when they leave the workforce.