Women are being held back from pension savings by a lack of confidence, income, time, and access to the right information, a report has shown.
Fidelity’s latest report, The Financial Power of Women, found that a women’s average pension pot is £28,900 — £5,600 less than an average man’s, according to Office of National Statistic data.
For those near to retirement, this gap is much larger, with average pension savings for men aged 55-64 amounting to over double that for women.
Fidelity has said that many women will therefore reach retirement with much less income to draw upon than men, despite the fact that they are more likely to outlive them.
The report has detailed how women are not, in general, confident about making financial decisions because they do not feel that they understand financial products well enough.
Over three quarters of the 1,000 women surveyed by the company said that a lack of knowledge was a barrier to investing, while 81 per cent said that a lack of trust in investment providers was stopping them from investing.
When they do make decisions, the report says that women opt to take cautious steps with their money. Using HMRC figures, Fidelity has underlined its findings, by showing that more women than men subscribed to cash ISAs in 2015-2016, while more men opted to invest in stocks and shares ISAs.
The report outlined four main day-to-day challenges that are also holding women back from investing in a better way. The first is a lack of income. Close to a third (29 per cent) of women told Fidelity that a salary increase would encourage them to invest.
Secondly, a reduction in household costs would help, with 23 per cent of women saying that a reduction in household costs would help them to invest more each month. This increased to 28 per cent among 35-54 year olds.
Thirdly, nearly half of respondents said that less time at work would give them the space they needed to invest more. Finally, 29 per cent that they would invest more if they did not have to spend so much time on household chores.
In order to close the pensions gap, Fidelity has said that women should save an extra one per cent of their salary over a working life of 39 years.
Fidelity investment director, Maike Currie, said: “A lack of time, confidence, access to the right information, industry jargon and not knowing where to start are just some of the obstacles that stop many women from thinking that investment is ‘for them’.
“Until these hindrances are removed, or at the very least addressed, we cannot unlock women’s financial power.”
Currie added that it was “time to act”, mentioning Fidelity’s GET INvested campaign that is designed to bring industry, government, the media, and women from all walks of life to come together to identify ways of “unlocking women’s financial power” and addressing the gender pensions gap.
Commenting on the campaign, The Pensions Advisory Service chief executive Michelle Cracknell, said that it was timely that the pensions and investment industries acted to empower women to take the action needed to secure their finances.
“We see a difference in the way women talk about their pension to us, where they go for support and the issues that they prioritise,” said Cracknell.
“There are key aspects of pensions planning that tend to impact women more, such as career breaks and lower earnings. But, it is important to recognise that women take in and seek information in a different way. We need to seek out ways that we can make women more confident in dealing with their money.”