Women are continuing to fall behind men in terms of pension provision, according to Scottish Widows.
This is the verdict in the Edinburgh-based life insurers annual Women and Pensions Report published last month looking at trends in retirement provision between the sexes.
It highlights that women have fallen behind men in terms of pension contributions, suggesting reasons why this might be the case, before presenting some possible ways to address the issue.
The economic climate and the Government’s austerity measures have put pressure on incomes throughout the country. The Office for National Statistics has recently said that the recession and inflationary pressures have left national well-being in Britain 13 per cent down on pre-crisis levels.
In this context it is perhaps to be expected that long term savings would be sacrificed in favour of more immediate requirements such as mortgages and monthly bills.
Both genders have been impacted upon by the economic squeeze but the effect on retirement provision is more noticeable amongst women according to Scottish Widows.
Of those surveyed, 19 per cent of women have decreased their long-term saving in the past twelve months with 28 per cent not making any pension contributions at all.
The result is that 42 per cent of women are saving adequately for their retirement compared to 49 per cent of men. Scottish Widows estimates that this equates to a £30,000 shortfall in retirement savings.
On a more positive note the report shows that amongst women who have become accustomed to saving for their retirement, there is a reluctance to reduce their contributions. Faced with a 10 per cent fall in income the majority would look to cut spending in other areas rather than their pensions.
In seeking to explain the gap Scottish Widows considered female attitudes towards saving. Whilst women are aware of the need to plan for retirement, 40 per cent of those asked said that they tended to save for the short term.
Savers with a long-term approach saw their fund as something to dip into on a rainy day, therefore preferring the accessibility of an ISA compared to a pension.
There are undoubted benefits of saving into an ISA making them an attractive alternative to pension arrangements for some people. Whilst there is no tax relief on the initial contribution, invested monies enjoy similar tax exemptions to a pension.
In addition benefits taken from an ISA are subject to neither income nor capital gains tax, whereas only 25 per cent of a pension can be taken as a tax free lump sum. Scottish Widows suggest that women in particular would benefit from a process combining the accessibility of an ISA with the tax relief of pension contributions.
