Women continue to be affected
disproportionately by the economic downturn and this is presenting itself
through the ever-increasing gap in retirement savings, when compared to men.
According to the eighth annual
Scottish Widows Women and Pensions report released on October 22nd 2012,
the gender gap in retirement savings has increased by over 10 per cent in one
Half of women report feeling
worse off than 12 months ago, compared to 45 per cent of men.
When it comes to retirement
savings, women are now saving an average of £776 annually less than men for use
in retirement. This is drastically higher than the £700 gender gap evidenced in
For example, if a 30 year old
woman keeps up with this annual rate of saving, at retirement age (65 years
old), she will have a £29,800 shortfall in today’s money, compared to an
The amount of women not saving
anything at all for retirement has also grown since the previous year.
The study was based on a sample
of 5,200 adults and showed that more than a quarter (26 per cent) of women are
presently failing to save any amount of money for retirement. In 2011, this
figure was 23 per cent, three per cent lower than this year.
In contrast, only 19 per cent of men
admitted to not saving anything for retirement, said the report.
This disquieting shortage of
provision has reverted back to levels from three years ago, rolling back any
improvements made in 2010 and 2011.
Women find it harder to save money
for the long-term and retirement because of important lifestyle differences,
such as having a full-time caring role or being employed part-time, explained
Lynn Graves, head of business development at the firm.
This is why it is vital that
employers, the government and the pensions industry raise awareness of the
gender gap in retirement savings to assist women in prioritising their
pensions. Lombard Odier has a
specialist occupational pension team that can assist people in planning for
Over the last year, the savings rate
among women has decreased immensely partly due to the repayment of short-term
A third of women (31 per cent) are
putting debt repayments ahead of saving for retirement.
The average amount owed – excluding
mortgages – increased extensively from £10,174 in 2011, to £10,922 in 2012.
Within widespread economic
uncertainty, many people in the UK are under pressure regarding their household
finances. However it is obvious that women are side-lining long-term saving in
favour of a more short-term approach, with 42 per cent of women placing living
expenses above retirement saving this year.
Further to this, the most popular
reason given by 31 per cent of women for saving long-term is to “save for a
rainy day”, not to save for retirement.
The perspective of saving for a rainy
day shows that women see their savings as a fund to dip into anytime to cover
any unexpected costs, not one to be protected for the future to pay for
On the positive side, women who are
already saving for their pension would rather cut back elsewhere if faced with
an income drop, than decrease their pension contributions. Just three per cent
said they would decrease their pension contributions.
Additionally, 28 per cent of women
surveyed are planning on boosting their contributions over the next year.
While women are right to focus on
ensuring their debts are managed, alternative sacrifices need to be made to
make sure retirement planning is in place. Lombard Odier has recognised
expertise in occupational pensions, including tax consultants, actuaries and
lawyers to help people make the most of their pension plans.