Women face £30k less in pension pots than men as their retirement savings fall even further behind
By Becky Barrow and Tanya Jefferies
The scale of the retirement crisis faced by women is laid bare by a report showing a 30-year-old female will end up with almost £30,000 less in her pension pot than a man when they reach 65.
The gap between what men and women are saving for old age has widened by 10 per cent over the past year as women are hit harder by the economic downturn, according to a report by pension giant Scottish Widows.
It also found one in four women were not putting any money into a pension, compared with a fifth of men.
Women traditionally find it harder than men to save for the long term because they are more likely to work part-time or have a full-time caring role for children or relatives.
But they are also prioritising living expenses and paying down debt over saving for retirement in the current tough economic climate, the poll of more than 5,200 adults showed.
It revealed that women are also more likely to 'save for a rainy day' rather than for retirement - meaning they regard savings as a pot to dip into to cover unexpected costs not as a fund to be ring-fenced and protected for the future.
One bright spot was that women who are already saving into a pension were reluctant to cut contributions.
Faced with a 10 per cent fall in income, most would cut spending on food, clothing and going out first, and only 3 per cent would cut their pension contributions, the survey found.
Lynn Graves, head of business development at Scottish Widows, said: 'The recession has had a major impact on people’s attitudes to managing their finances, as the messages to "live within your means" have been hammered home.
'While women are right to focus on making sure their debts are manageable, other sacrifices may need to be made to ensure retirement planning is in place.'
The Scottish Widows report also warned that women face being forced to work into their 70s because they cannot afford to stop.
It warns of ‘a disconnect between the age at which women would like to retire and when they believe they will realistically be able to’.
When asked when they would like to retire, the most popular choice was 60.
But with the state pension age being increased this is unlikely for millions of women who have no private or company pension. The state pension age is rising to 66 by 2020 and to 67 by 2028 and will continue to go up.
Lynn Graves, head of business development at Scottish Widows, said women are penalised by the fact that many stop work when they become mothers or switch to part-time work which may not offer a pension.
‘Important differences in lifestyle mean women often find it more difficult to save for the long-term and retirement,’ she said.
Many women said they were relying on their husband or partner to fund their retirement, but according to the report there is ‘little communication’ between the two on the subject.
It warns of the dangers of this approach, particularly if the relationship collapses. Many women will be left with a poorer pension, or no pension, after they divorce.
The report has been issued as new rules, which came into operation on October 1, force bosses to pay into a pension for their workers for the first time.
The pensions revolution is designed to solve the problem, which particularly hurts women, of not building up a pension.
Over the next five years, up to 11million workers will be automatically signed up to a pension if they are between the age of 22 and state pension age and earn more than £8,105 a year.
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