Why are women failing to close the retirement savings gap?
The new research from Aegon UK has found that this has doubled over the past year, when only 5% of British women were in this position.
However, it remains well below the male average of 14%, leaving women with a long way to go before they achieve the same level of retirement readiness as men.
Aegon explain in their research that the new pension freedoms introduced last April has encouraged more women to save into their pension pots.
Women are saving 14% more into their pensions as a direct result of pension freedoms and men are saving 16% more.
Other initiatives such as workplace auto-enrolment may also have helped fuel this 5% increase in the number of women who are on track for the retirement they want.
Along with reforms to pension freedoms and workplace auto-enrolment, the state pension age for women is also being equalised by government.
As a result, women will not receive a state pension until age 65 by 5th April 2016.
Aegon found that women currently plan to retire, on average at age 63. This is a year earlier than the average age at which men plan to retire.
The research found that women have an average of £20,000 saved in their pensions. This is less than half of the average saved by men, at £52,500.
It is thought this savings gap is compounded by the fact men contribution on average £85 more each month to their pension pots than women, who save an average of £170 a month.
Another area in which women are falling behind men when it comes to pensions is the frequency of reviews.
Only 21% of women are checking the performance of their retirement savings in the past six months. And just 19% of women have taken steps to review their plans for retirement in that time.
Men on the other hand are more likely to review performance and plans, at 27% and 25% respectively.
Commenting on the findings, Kate Smith, Head of Pensions at Aegon, said:
“Despite encouraging signs for women, the truth is that their expectations are simply not lining up with reality.
“The value of women’s pension pots is well under half of their male counterparts but they currently expect to retire aged 63, a year earlier than men.
“This target retirement age comes against a backdrop of an increasing state pension age for women.
“Over the next four years women’s state pension age will be increased to 65. With this in mind, they’ll need to fund an additional two years of retirement from an inadequate pension pot before the state pension kicks in, unless other income, such as their partner’s salary or retirement savings is available.
“While the freedoms have certainly had a positive impact on the women’s savings behaviour, with double the proportion on track for retirement since last year, the challenges women face when planning their retirement remain complex, and it’s vital that the government and industry continue to help make pension saving a priority.
“Auto-enrolment will support women’s savings levels, as the mandatory contribution levels increase, but more must be done to ensure that women, who often face a disrupted working life, are given the support to help them save more and bring their retirement expectations in line with reality, and provide the retirement they want.”