The impact of the gender divide
On average, women who have entered pension income drawdown since the pension freedoms have retirement pots worth £118,000 – 34 per cent less than the average man’s £179,000 pot, according to research by Censuswide, published by AJ Bell on March 7.
The study – a survey of 554 respondents over 55 that have entered drawdown since April 2015, conducted between February 8 to 14 this year – found the differing income levels naturally translate into a divide over retirement expectations.
Some 62 per cent of female respondents were concerned about running out of money in retirement compared to 53 per cent of men.
Indeed, Ms Morrissey points out that research by Mercer suggests the gender pension gap is around 40 per cent, roughly double the gender pay gap.
She says: “There are many reasons for this – women tend to be paid less than men, they are also likely to work part-time and take career breaks to look after children.”
Couples should have open and honest conversations about their shared aims for retirement and how well they’re saving together.
Source—Catherine Stewart, Scottish Widows
Ms Stewart notes the 14th annual ‘Women and Retirement Report’ published by Scottish Widows in 2018 showed 54 percent of women were saving adequately for retirement, compared to 56 per cent of men.
She says: “For younger women, the fear of financial hardship is clearly discouraging many from saving into pensions, leaving those most financially vulnerable at an even greater disadvantage.”
Playing catch-up
Ms Lord says the key is making sure women are saving and reviewing their finances on a regular basis.
She says: “It is essential to include saving as part of the monthly budget and make sure funds are set aside for the future.”
But to really close the gap, women must prioritise their pensions early in their career, and get maximum benefit from employer contributions, tax relief and investment performance, suggests Ms Morrissey.
She adds: “They should also make sure they plug any gaps in state provision by ensuring they continue to receive National Insurance credits when they are at home caring for children.”
Ms Stewart also suggests “tracking down any older pensions they may have and consolidating them may be an option,” as well as “paying a little extra before, during or after taking extended leave, can go some way to mitigating the impact to retirement savings”.
She adds: “Couples should have open and honest conversations about their shared aims for retirement and how well they’re saving together.
“In addition, seeking legal advice is crucial to understand the legalities of what happens to pension pots during divorce proceedings and what pension offsetting is.”
Source - Victoria Ticha is a features writer for Financial Adviser and FTAdviser
Published 01/04/2019