Men have £78,000 more in pension pot at retirement

The number of women saving for retirement has hit record levels, but men will still have on average £78,000 more in their pension pot when they stop working.

The annual Scottish Widows Women and Retirement Report found that the number of women contributing towards a pension has risen by 14.6% over the past 15 years, compared with an 8% increase in participation among men.

Fifty-seven per cent are now saving enough for their retirement, according to Scottish Widows, but 55% still feel they are not doing enough.

Just over a third of those earning low- to middle-level salaries (between £10,000 and £20,000 per year) have opted out of a work pension because of other financial commitments. Seven in 10 women in this group are likely to face financial difficulties, it found.

The gender pay gap means that men are still able to put away more money overall, and the additional £78,000 they are likely to have in their pension pot at retirement equates to more than 2.5 times the average disposable household income in the UK.

Other financial barriers prevent women from saving as much as they would like, according to Scottish Widows. For example, pension contributions stop after 39 weeks of maternity leave, while many women with childcare responsibilities need to work part time, reducing their earning potential.

A further issue is awareness – Scottish Widows found that four in 10 women felt they were in the dark about how much they were saving for retirement.

Jackie Leiper, distribution director at the company, said: “We’ve come a long way, but 15 years later there’s still an unacceptable gap between men and women.

“The groups who are often overlooked, such as lower‐middle income women, need more support to overcome the challenges they face in saving for the future.”

The company has called for a series of reforms that enable people to take a more tailored approach to retirement savings, including improving the scope of auto-enrolment and the potential to access pension savings for other major outgoings such as a first home deposit.

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Leiper added: “By doing so, we can ease the financial stresses that disproportionately impact women, such as those that go alongside life events including starting a family and buying a first home.”

This weekend, shadow chancellor John McDonnell said Labour would put together a £58bn scheme to support women born in the 1950s who had been impacted by changes to state pension age.