Woman are more likely than men to access pension savings early, to help bridge living costs in the run up to retirement.
New research by Phoenix Insights indicates that four out of 10 (40 per cent) women over 45 expect to dip into their retirement savings for this reason, compared to just three out of 10 (32 per cent) men. Phoenix says this is exacerbating the pension gender gap.
The research shows the extend of this problem with around 44 per cent of women over 45 saying that even without these earlier withdrawals they do not think they have enough pension savings to support them in retirement.
The Department of Work and Pensions estimates that the gender pension gap in private pensions is 35 per cent. Pay disparity is a big contributor to this, but Phoenix Insights’ report, Caught in a Gap, highlights that the life stages women can go through – such as motherhood, divorce, menopause and caring responsibilities – also disproportionately affect earnings, and consequently women’s capacity to save. The report shows that by mid-life (aged 45-54) men are saving 50 per cent more into their workplace pension than women.
The research found men over 45 have saved on average £146,100 for retirement, more than twice the average amount women have saved (£67, 200). However, there was also a significant proportion of adults (31 per cent) who had no idea how much they have saved.
Phoenix Insights director Catherine Foot says: “As many as 18 million people in the UK are not adequately financially prepared for later life, and a disproportionate number of these are women. The research suggests more women than men will access their retirement savings earlier than planned, so this will likely exacerbate the issue.
“For meaningful progress in this area, we need to make saving more accessible, especially for those on low incomes and working part-time. Some women have been trapped in a cycle of being unable to pay into their pension either through a lack of affordability or because they are excluded entirely from workplace pension saving. Our research found women are over three times more likely than men to fall under the earnings threshold for auto enrolment.”
She adds: “There is also limited awareness over the causes and consequences of the gender pension gap.We need polices that seek to improve the savings capacity of women across the different life stages, and encourage employers to go above and beyond the minimum levels of support.”
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