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This ‘pension gap’ reveals that 54 per cent of men who could and should be saving for retirement are saving adequately – compared to just 41 per cent of women.

Most worryingly – this ‘pension gap’ is growing.   Between 2006 and 2007 the percentage of men saving adequately increased from 49 per cent to 54 per cent, but for women it remains stuck on 41 per cent.

Only 34 per cent of women have Defined Benefit occupational pension schemes compared to 46 per cent of men. Similarly only 18 per cent of women have Defined Contribution occupational pension scheme compared to 22 per cent of men. For those people who are saving into a Defined Contribution scheme, women are saving on average £84 per month and men are saving £128. 

Contributions

This gap exists partly because women continue to experience a large earning gap compared to men, and so have less ability to save. Women earn just 62 per cent on average male earnings. This is reflected in a similar gender gap in pension savings – women’s contributions to defined contribution pension schemes are typically just 66 per cent of men’s. 

However, the pension gap is not just down to earning potential.   Men who are in work are more likely to belong to their workplace pension scheme than women – 35 per cent of women do not have any pension scheme compared to 22 per cent of men. Of those that are saving, men save 10.3 per cent of their earnings on average – compared to women who save 9.3 per cent.

Employers also contribute more money into male employee’s pension schemes.   The typical employer contributions into are worth 6.5 per cent of annual salary to a man, compared to just 5.7 per cent for a women.

Ian Naismith, head of pensions market development at Scottish Widows, says: “It has widely been reported that women are disadvantaged in the labour market in terms of earnings – what this report reveals is that as well as earning less, women are saving less for their futures than men."

"Even the women that are saving for a pension are saving a smaller percentage of what they earn – effectively compounding the effect of the pay gap, and making the gender ‘pensions gap’ even wider.  The gender gap in state pensions is falling because of the Government’s reforms, but the gap in private pensions is increasing.”

The Scottish Widows report What Women Need – Pension provision for today and tomorrow – which is in its third year – also reveals that a third of men claim they have a financially dependent spouse/partner (this equates to 7.3 million women).

At the same time, women are less likely to be in full time employment than men:

This means that many women are not accruing sufficient pension funds to ensure a comfortable retirement.

Working patterns 

For many women family comes first, 36 per cent have at least one dependent child and 28 per cent have had to stop or reduced their savings for the long term because of their children. Of women not in work, 70 per cent are housewives and 43 per cent of women not working are caring for children.

Ian Naismith, head of pensions market development at Scottish Widows, says that the outlook for women’s pensions continues to be bleak as their working patterns are unlikely to change in the near future. They are also much more likely to stay at home and look after their children than men. We all have the problem that we don’t prepare enough for our futures but women need to realise that it’s up to them to put plans in place for funding their retirement."

“Women need to remember that without their own pension scheme in place they could be left without anything for their retirement.  If women don’t want to tie up their money in a pension scheme then they should consider other options such as an ISA – then the money is available if it’s needed for emergencies.  They also need to be bold in their investing.  Far more women than men save only in bank accounts and cash ISAs, but over the long term an equity ISA or a pension is likely to give much better returns.”

The research to support the report was carried out by YouGov who interviewed a national representative sample of 5,414 UK adults aged 18+ between 7th and 26th February 2007.

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Related links

• Scottish Widows