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Wednesday, 30 July 2014

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Women losing out to the tune of £30k a year in pension savings gap

The gap between the amount men and women are saving for their retirement has grown to a new high of £30,000 over a working lifetime, a study has found.

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It all adds up: Women are putting aside just over £82 a month for their retirement on average, compared with men, who are saving more than £147

Women are putting aside just over £82 a month for their retirement on average, compared with men, who are saving more than £147, the eighth annual Scottish Widows Women and Pensions Report found.

Over a year, women are saving £776 less than men, representing the biggest gender pension savings gap the report has ever seen, which adds up to a difference of almost £30,000 or around a year’s average salary over a working lifetime.

A 30-year-old woman who maintains this average annual rate of saving would face a shortfall of £29,800 in today’s money, compared with her male counterpart, if she retired at 65, Scottish Widows said.

The latest gap is significantly higher than the £700 annual difference between the amounts men and women were putting away for their retirement a year ago.

The share of women saving nothing at all for their later years has also increased since last year. More than a quarter of women (26 per cent) are failing to put anything aside for old age, compared with 23 per cent who reported not saving last year.

By comparison, just under a fifth (19 per cent) of men are saving nothing for their retirement, the survey of 5,200 adults found.

The report suggested that the gap has partly been driven by an increase in women’s personal debt levels, with around a third (31 per cent) of women saying they are having to prioritise debt repayments over retirement saving.

Excluding mortgages, the typical amount owed has risen to just under £11,000, while women have also had to cut their monthly savings levels to £95 on average, from £130 a year ago.

Meanwhile, average monthly savings levels for men have risen from £174 a year ago to £185.

Four in 10 women said they have had to prioritise living expenses above saving for old age in the last year, amid the squeeze on household budgets.

Lynn Graves, head of business development, corporate pensions at Scottish Widows, says: “Important differences in lifestyle such as being more likely to work part-time or have a full-time caring role, mean women often find it more difficult to save for the long term and retirement.

“It has therefore never been more important for the pensions industry, Government and employers to raise awareness of this gender gap in retirement savings and help women prioritise their pensions.”

The findings follow the Government’s landmark scheme launched at the start of this month to automatically enrol up to 10 million people into workplace pensions.

Helen Dean, managing director for scheme development at Nest, a not-for-profit pension scheme set up under the new rules, says: “For as little as £2.37 on average per week, automatic enrolment will help around 5.5 million women start saving towards a pension for the first time.”

She added: “Many women have been excluded from saving for a pension because they didn’t earn enough or employers didn’t offer one.

“But for the first time, automatic enrolment will give millions of women the right to a workplace pension that will be paid into by their employer and the Government.”

Ros Altmann, director-general of Saga, says: “These figures are another worrying example of how women are still very much second-class citizens when it comes to pensions.

“They earn less than men and have fewer opportunities to save.”

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