Scottish Widows’ latest Women and Retirement Report has found that the gender pension gap has closed to its the narrowest margin on record at 1%.
59% of women are now saving adequately, compared to 60% of men.
However, the persistent pay gap and part-time working ratio means women saving adequately on the median wage are still saving £1,300 a year less than men.
This means for a woman to save the same amount into her pension as a man, she will need to work an extra 37 years – which would take her over the age of 100 if retiring at State Pension age – a number that is likely to grow as the full economic impact of the pandemic is realised, the report said.
Young women are among those struggling most to save for later life. Just 46% of those in their 20s are saving the recommended minimum 12% of salary. This compares to 56% of men the same age, and to almost two-thirds (64%) of women in their 50s, showing that women do tend to save more as they get older.
Jackie Leiper, managing director, workplace savings at Scottish Widows, said: “While we’re heartened at the record levels of saving, there’s still a mountain to climb before we reach true gender pension parity. Women face decades of extra working before they’ll have a pension to match that of a man’s, which is unfair and unacceptable. Until we can resolve structural inequalities, from the gender pay gap to the uneven division of labour at home, we will never have pension equality.”
Automatic Enrolment has been a huge driver in getting more women saving for the long-term, but there are still a number of structural challenges preventing a truly level playing field.
For instance, women are still paid less than men, significantly impacting their ability to save. Of those in full-time jobs, men earn on average £6,100 more a year, a figure that increases to £10,800 for all employment types.
Extra commitments such as childcare also tend to fall on women, reducing the number of hours they are able to work and therefore limiting earnings. In 2020, three-quarters (75%) of all part-time workers in the UK are women and the majority of UK families with a child under four consist of a father working full-time and a mother working part-time.
Scottish Widows says these challenges are likely to have been amplified by the pandemic as women are more likely to be working in shutdown industries, such as the hospitality trade, where many have been furloughed, seen their hours reduced or been made redundant.