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Provider Scottish Widows has called on industry, regulators and employers to address growing economic disadvantages for women as new research shows that gender pay and pensions gaps persist across income groups, with single mothers left particularly vulnerable in the cost-of-living crisis.
The gender pay and pensions gap is widening, with the average man earning £33,000 a year, compared with £22,800 for the average woman. The issue is compounded by the time women retire. The average pension wealth of a 65 to 74-year-old man is £250,000, against £150,000 for women. Worryingly, one in five women in their 30s (19%) say they have no pension savings, while 12% of men in that group say the same, the research by provider Scottish Widows has found.
The provider says the uneven effects of cost-of-living increases are exacerbating structural inequalities, and negatively impacting the retirement prospects of most women. The 1.7m women who raise children alone are seeing this the most, as 28% are now cutting back on essentials like food and basic clothing.
“Despite increased reporting, stubborn gender pay gaps persist for women across the UK. Our research shows that single mothers are much more likely to be exposed financially, cutting back in ways that jeopardise their wellbeing,” said Jackie Leiper, managing director of workplace savings at Scottish Widows.
Divorce or motherhood can leave women’s retirement prospects in tatters, and Leiper said current economic conditions are making it harder than ever to fix the deep inequalities that underlie the pensions gap. Single mothers have average total wealth of just £29,000, compared with more than £275,000 for the average couple with dependent children in the UK. When it comes to pension savings, lone parents, 90% of them women, have less than £15,000 on average.
“Providers, regulators and employers must collaborate urgently to address this crisis – from reconsidering the auto-enrolment threshold to far greater investment in childcare support – to help the most vulnerable in the near term,” she said.
Women of all ages are less likely than men to be saving for retirement, but this behaviour is particularly pronounced among single mothers. Two-fifths say they are not a member of a pension scheme, compared with 29% of women in general.
The report also offers figures on the differences in pension assets and saving between different ethnic groups, finding that private pension assets were lowest for Black African savers, who also had the lowest level of total wealth at £34,300.
Some groups reported being more likely to rely on property income or cash for their pension. For example, Indian savers had similar total wealth to white British savers at more than £313,000, but held a much smaller proportion of this - £70,500 compared with £130,700 - as pension assets.
To address the gender pensions gap, Scottish Widows proposes:
tackling the causes of the gender pay gap through equalising parental leave rights and overhauling childcare;
increased efforts to support those preparing for retirement outside of traditional pensions;
adjusting financial education to demographics, giving extra guidance to young women;
removing the £10,000 income threshold for auto-enrolment; and
helping couples make informed decisions about annuities so a spouse is not left without income when one partner dies.
What changes are needed to improve women’s retirement prospects?