Women are trailing men badly in the savings race for retirement, according to new research.
While men amass an average pension pot of £73,600, women manage to stash just £24,900, says pension giant Aegon.
And although the savings gap between the genders is astonishing, women are putting more money aside for retirement than ever before.
Only a year ago, the average woman’s pension pot was only £16,700 – a third less that now.
But still more than ever before are working beyond 70.
Why women don’t save
The company says there is no clear reason for the change, but believes several factors have impacted saving for women, including:
- Workplace pension auto-enrolment
- Access to money through new pension freedoms
- An awareness women need better financial provision for their old age
Women have not only increased their pension savings during the past 12 months. Their average ISA savings have also risen from £5,400 to £14,900.
But although 13% of women are saving more and another 14% know they should save more, four out of 10 have never made any retirement plans and only one in five have reviewed them in the past six months.
When asked why they did not save, 27% argued they did not understand how pensions worked; 13% could not find the information they wanted online and 11% avoid the issue as they are embarrassed by how little they have saved.
What the experts say
Kate Smith, Head of Pensions at Aegon said: “It can’t go unnoticed that women have made some encouraging steps forward in saving for retirement. However, the difference between men’s and women’s pension savings is stark.
“Women often face a more disrupted savings journey due to maternity leave and working part time, juggling a career and children, so it’s crucial that they actively engage with their pension savings – burying heads in the sand is simply not an option. It’s concerning that over a third of women don’t know how much they have saved in their pension. Without this vital information it’s impossible to know what to do next.
“Gaps in pension savings history can leave you worse off in retirement but for most women it’s unavoidable. While women are having babies, they will always be on the back foot when it comes to pension savings. For example, taking a full year off work on maternity leave and stopping or reducing pension contributions to a workplace pension could lead to women needing to work longer to make-up the shortfall. However, with the right preparation, arrangements can be made to fill the gap before it’s too late.”