MARKETS & INVESTING
The unique challenges women face with their retirement preparation must be actively tackled now if we truly want equality in retirement income . Currently , the retirement income gap is 39 % (£ 19,000p . a . v £ 12,000p . a .)². We cannot continue to talk around the gender pension gap mountain , ‘ raising awareness ’ or ‘ providing insight ’ for the next 48 years without looking closer to home to understand and act on what is within our control . Having a 70-year-old mum and a 17-year-old daughter at opposite ends of the retirement spectrum , notwithstanding my experience of divorce , selfemployment and a career break all provide me with a unique insight , both on what we can learn from previous generations and what action we can take to create a different outcome for our young people . The best way to predict the future is to create it . At the end of the retirement journey , some of our mothers and grandmothers are living in retirement poverty , according to the definition supplied by the PLSA ³. This is due to a combination of state pension equalisation , lack of financial education , traditional generational gender roles and income inequality . At the other end of the journey , we have young women entering the world of work . They are faced with the structural inequalities that lead to the average retirement income difference of £ 7,000p . a . as stated above ( men £ 19,000 and women £ 12,000 )² before they even create their LinkedIn profile ! Our latest Women and Retirement Report confirms that this is a worrying trend which is set to continue , with 39 % of women not on track to achieve a minimum retirement income , rising to 60 % of divorced women and 75 % of single mothers ². As a single mum myself , this feels uncomfortable ! So the research and awareness around the gender pay and pension gap is high BUT ... What can we do right here , right now ? Raising awareness , collaboration and education are key . If I had a ‘ gender pension gap ’ magic wand , my three ‘ quick win ’ wishes would be :
1 . Supporting clients with intergenerational conversations Encourage clients to start small , ensuring payslips and income are fully understood . I explain my payslip and all its components to my daughter – small action but immediate impact . Drive home the ‘ magic ’ of each component of a workplace pension contribution and the difference starting young can make to their retirement in pounds and pence . Encourage opt-ins and ensure matching schemes are understood and maximised . Starting at age 18 instead of 22 can mean an extra £ 46,000 in retirement⁴ . Third party contributions – can advised clients consider closing their daughter ’ s gender pension gap ? An extra £ 100pm would close this gap , giving the average woman £ 4,000 more in their retirement fund5 than the average male .
2 . Advising on divorce According to our latest research , 60 % of women did not discuss pensions as part of their divorce , leading to an average loss of £ 77,0002 , further exacerbating the gap . At a recent event with advisers and lawyers , we discussed the fact that this is a time where emotions are extremely heightened , pensions are never the number one consideration . There was consensus that the impact of tighter collaboration between advisers and lawyers earlier in the process , could create more favourable outcomes for women in divorce .
3 . Advising employers Proactive action tackling the gender pay gap ( consequences are lower pension contributions , lower disposable income ). Flexible working policies and return to work support to ensure women can work in the industry they have experience in , and they are qualified in whilst managing caring responsibilities . Maternity / parental leave . Pre-emptive conversations bringing to life the impact of leave on pay , pension and progression should be done before the period of leave takes place can ensure preventative action can be taken6 . Only by firstly acknowledging that this is something that affects everyone , then working together across the generations to tackle the root causes of the gender pension gap , will we create the transformative change required to ensure equality in retirement savings .
Women are faced with the structural inequalities that lead to the average retirement income difference of £ 7,000 per annum . To find out more , read the Scottish Widows ’ Women & Retirement Report 2023 , which can be found in the Media Centre section of our website ( www . ScottishWidows . co . uk / Aboutus / Media-centre / Reports / Women-retirementreport . html )
Sources : 1 . ons . gov . uk / employmentandlabourmarket / peopleinwork / earningsandworkinghours / bulletins / genderpaygapintheuk / 2023 2 . scottishwidows . co . uk / about-us / media-centre / reports / womenretirement-report . html 3 . retirementlivingstandards . org . uk / 4 . ifamagazine . com / workers-to-save-extra-500-a-year-into-pensionsunder-new-auto-enrolment-rules / 5 . adviser . scottishwidows . co . uk / assets / literature / docs / 38052 . pdf 6 . beatthegap . com /
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