The Baby Bounce - Mothers Drop the Ball on Pensions Savings Says Scottish Widows

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The Scottish Widows Women and Pensions Report "What Women Think"*, now in its fourth year reveals that while the nation is beginning to save more, women are still falling far short of men.

With the rising cost of living impacting on people's savings habits, it is going to be even harder for women to save for retirement and we believe the Government should be doing more to incentivise saving such as the rebadging of tax relief to make it simpler to understand. For example, by making it clear that for every £4 an individual contributes the Government will add in £1.

The Scottish Widows Women and Pensions Report "What Women Think"*, now in its fourth year reveals that while the nation is beginning to save more, women are still falling far short of men.

This 'pensions gender gap' reveals that 55% of men (up from 54% in 2007 who could and should be saving for retirement are saving adequately - compared to just 46% of women (up from 41% of women in 20071.)

The outlook doesn't look like it will get any brighter for women over the coming months, with 60% claiming they will be unlikely to save more for the long term over the next year as the credit crunch takes hold. 40% of women say they felt financially better off five years ago than they do now. Over a third of women (35%) can't save anymore than they currently are and almost half of women (44%) don't think they will ever save into a private pension. For those women that are saving, 38% are mainly saving for the short term.

What stops women saving?
For many women, having children and inconsistent working patterns are a major barrier to saving consistently into a pension. Around a third of women (34%) have financially dependent children and over a quarter of mothers (27% - 2.2 million)3 have stopped or reduced contributions to their retirement savings. Many women's working patterns are inconsistent as well, with only 37% of
women working full time.

Ian Naismith, head of pensions market development at Scottish Widows comments: "Although women are slowly beginning to catch up with men, the gap in pension provision is still too high and there still needs to be a dramatic shift in women's attitudes to pensions saving. While having children and irregular working patterns hugely affect pensions savings, there is more that women can do to save for the long term and they should start saving consistently, early in their working lives to make up for the time that may be lost should they have children.

"With the rising cost of living impacting on people's savings habits, it is going to be even harder for women to save for retirement and we believe the Government should be doing more to incentivise saving such as the rebadging of tax relief to make it simpler to understand. For example, by making it clear that for every £4 an individual contributes the Government will add in £1."

The Scottish Widows report also reveals that there are many women who are financially dependent on their spouses. Almost a third (30%) of people have a dependent spouse or partner. Men are also much more likely to have a dependent spouse or partner (33%) than women (13%). In addition, 6.2 million women4 (25%) believe their partner's income will help to keep them comfortable in retirement, though 40% of women who have no private pension scheme and are married/co-habiting also acknowledge they will need to generate income from other sources.

Whilst divorce rates have fallen, many marriages still fail before retirement5. Despite the rules being changed back in 2000 to enable pension splitting on divorce, an astonishing 81% of divorcees still do not consider the pensions assets when discussing a divorce settlement. For those women getting divorced aged 51 plus, 79% do not take into account pensions as an asset, and these women will have less time than younger women to make alternative arrangements.

Ian Naismith, head of pensions market development, Scottish Widows continues: "We believe it is particularly important that women should build up pensions in their own name, rather than relying on their partners. For many women their partner's pensions will not be enough and if they did ever get divorced then they will not have sufficient savings to fund them through retirement. From 6 April 2009 the Government intends to relax the rules applying to pensions arising from a pension sharing order on divorce making them more flexible, but it remains to be seen if this will result in an increase in sharing orders."

Men vs women - the pensions savings facts

  •     Amongst those with a private pension scheme, men are more likely to be building up a Defined Benefit (DB) pension than women (42% compared to 34%);
  •     Among younger people with a private pension (aged 18-29), the gap in DB provision reduces to 2%, probably because both sexes are less likely to have access to a DB pension than those closer to retirement;
  •     Amongst those with a private pension scheme, 20% of women have access to a Defined Contribution (DC) scheme compared to 24% of men;
  •     A third of people can't afford to increase their monthly contributions to long term savings;
  •     Men could afford on average to add £122 to their long-term savings contributions per month compared to women who could add £79;
  •     23% of men who have a pension have a personal pension scheme compared to just 17% of women.

Scottish Widows provide a wide range of products and services related to personal pensions, retirement income and stakeholder pensions.

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Susan McDonald