Pay disparity slows the closure of the gender based savings gap

The seventh annual Scottish Widows Women and Pensions Report 2011, reveals that the number of women saving adequately for their retirement has reached the highest level in the report’s history, according to figures based on women who could and should be saving for retirement.

50 per cent of women now save adequately for retirement, compared with 43% in 2010. Women who save are saving a higher percentage of income than men – 12.9% for women compared with 12.6% for men, including employer pension contributions.

However, despite the higher income percentage saved by women, men are saving as much as £700 more than women each year due to a disparity in income levels. The Scottish Widow report findings suggest that men are able to save significantly more for retirement as they typically earn higher salaries; £28,091 p.a., for men compared to £22,490 for women, a difference of nearly 20% (figures from the Office for National Statistics Annual Survey of Hours and Earnings (ASHE)). The average man who is preparing for retirement saves £4,158 a year, compared to £3,457 a year for women, both figures again including any employer contributions into their pensions.

The age related gap in levels of saving by women is also growing – 56 per cent of women aged 51 and over are saving adequately for retirement compared to 46% of women aged between 30 and 50. The report also tells us that 23% of women are still saving nothing at all, compared with 17% of men. 71% of women say they can’t afford to save long term, compared to 60% of men.

Based on a sample of 5,200 adults, the report found that the gap between the number of men and women saving for retirement is closing, now at just 3 percentage points, down from 9 percentage points in 2010. The number of older women saving adequately for retirement has increased by 18 percentage points over the last 12 months, while 38% of women saved adequately for retirement in 2010. However, the 30 to 50 age group is now lagging behind by 10 percent.

Younger women understand that the government won’t be able to cover their retirement, with only 12% of women under the age of 30 assuming that it will contribute most of the income in retirement, compared with 28% of women over 50. This highlights the changing attitudes towards financial independence amongst younger women.

Younger women who have more faith in their cash savings (including ISAs) to help fund their retirement, are not taking action. Only 19% of women under 30 are currently investing in cash savings compared to 40% of those over the age of 50. On the flip side, older women use more equity backed investments compared to younger women, or even their male counterparts.

If you want to find out more about savings for retirement, contact one of the team at Ashley Law Crawley on 01293 817240  who will be happy to help.