News analysis: As long-term saving among women hits an all-time low, providers and advisers have urged schemes and the wider industry to cooperate in encouraging adequate retirement saving.
Schemes have been urged to better communicate to women about the importance of saving to financial independence in retirement, and to raise awareness of the unique lifestyle pressures that inhibit putting money aside.
Provider Scottish Widows revealed this month, in its annual report on the subject, a pensions savings gap of £1,000 a year between men and women.
The survey, which covered 5,000 people, found retirement saving among women had plummeted, with just 40 per cent making adequate pension contributions compared with 49 per cent of men.
This is down from 42 per cent in 2012 and 50 per cent in 2011. “The situation where women are treated as second-class citizens belongs in the past. Greater equality in pension provision is an important part of the change that we need to achieve as soon as possible,” said Malcolm McLean, consultant at Barnett Waddingham.
The government’s state and workplace pension reforms have gone some way to tackling the problem, according to Scottish Widows.
Nearly a quarter of women aged 30 or over were auto-enrolled into a workplace scheme by the end of February 2013, and the report said they were “highly likely” to stay enrolled.
The Department for Work and Pensions considers these findings a success, and a spokesperson added: “Auto-enrolment into workplace pensions will encourage many more women to save, and it is encouraging that the report suggests where women are enrolled they are staying in.”
What managers and policymakers can do
But industry commentators believe more can be done. Martin Freeman, director at JLT Employee Benefits, said the introduction of an earnings threshold for auto-enrolment saw many thousands of women excluded from pension saving, which ultimately undermines pension reform.
“Women are disproportionately affected by raising the auto-enrolment threshold… If the goal is to get people saving as much as possible then you might want to think about whether further rises in the threshold are taking too many women out of [retirement saving],” Freeman said.
Meanwhile, Lynn Graves, head of business development at Scottish Widows, said auto-enrolment has been “fundamental” in promoting pensions but argues this should be supplemented by additional initiatives.
“The pensions industry, government and employers need to work together to raise awareness of the unique lifestyle pressures that take their toll on women’s savings at different ages, and help women prioritise their pensions,” Graves said.
The Scottish Widows report highlighted a number of barriers to women saving for retirement. Alongside the well-publicised pay inequalities and career breaks, women were found to be more likely to rely on their partners for financial support while they continue to provide for offspring rather than saving for their own retirement.
To counter this, Freeman said employers and pension providers need to rethink communication to ensure that the importance of retirement planning has greater resonance with a female audience.
“If women prioritise giving money to their children before looking after themselves then maybe communications should highlight how financial independence in retirement leaves you better placed to help with grandchildren,” Freeman said.
He added there are significant challenges for the industry to overcome, but these are not insurmountable. “By working together, the saving inequality can be tackled more quickly,” Freeman said.
