Alarming trends in retirement saving have been revealed by the eighth annual Scottish Widows Women and Pensions Report. The number of women saving nothing at all into a pension has increased to 26%, compared with 23% last year.
This is compared with just 19% of men saving nothing for retirement – last year this figure was 17%.
For more on saving for retirement, read our introduction to personal pensions.
Women facing a pension shortfall
Last year the report, which surveys 5,200 people, found that men were saving £700 a year more than women. This year that figure has jumped to £776.
This means that a 30-year old woman who maintains this average difference will face a relative shortfall of £29,800 compared to a man if she retires at age 65.
Suggested reasons for the widening gender gap include differences in lifestyle between men and women, such as women being more likely to work part-time and therefore having more difficulty in saving for retirement.
The report also highlights another reason for women falling behind men in the savings stakes. 31% of women are putting debt repayments before saving, and with good reason – the average amount owed has increased by £748 this year – from £10,174 to £10,922. Retirement savings by women have dropped as a result of the need to repay short-term debt (excluding mortgages).
Find out what you can do to manage your debts in our guide on how to deal with debt.
Women also said their top reason for saving more was for a rainy day, rather than retirement. Lynn Graves says: ‘Many women view their savings as a pot to dip into to cover unexpected costs and not as a fund to be protected to pay for retirement. Although there is a clear need to balance living costs with unexpected expenditure, this can’t be at the expense of women protecting themselves in old age.’
Pension worries high among UK consumers
These findings come in the wake of the latest Which? Quarterly Consumer Report, which found that 62% of UK consumers are worried about the value of their pension, while 41% planned to cut back on savings and investments overall in the next few months. The next report is due to be published tomorrow – Tuesday 23 October.
Amongst the women surveyed by Scottish Widows who were already saving into pensions, just 3% say they would cut back on pension contributions if they faced a fall in income.
Most women said they would cut spending on food, clothes and going out before cutting back on pension saving. 28% of women also said they plan to save more over the next 12 months.