The pensions saving gap between men and women has narrowed to the smallest levels on record, according to a report – but women are still facing a huge savings shortfall.
Scottish Widows said that, when part-time working and career breaks are taken into account, a woman could potentially end up with a savings pot worth £100,000 less than that of a man.
It said most of this gap would be driven by differences in income rather than savings rates.
Nearly three in five (59%) women aged over 30 are saving adequately for their retirement as are 60% of men, according to its 16th annual Women and Retirement Report.
The one percentage point gap is the narrowest in the history of the reports.
Historically, around 40 to 45% of women have been saving adequately – meaning they put away at least 12% of their income, including employer pension contributions and tax relief.
This compares to 50 to 55% of men, the latest report said.
Despite the narrowing gap, the average man deemed to be saving adequately is putting away £1,300 a year more than a woman, the report found.
This is a reflection of how the earnings gap women often face over their working lives translates into a pensions gap later in life.
Women often earn less than men and work part-time or take career breaks to shoulder childcare responsibilities.
The median average income in 2019 was about £30,400 for a man and about £19,600 for a woman.
This means a man would typically be deemed to be saving adequately by putting away just over £3,600 (12% of salary) a year.
But a woman would typically be considered to be saving adequately with around £2,300 saved each year – £1,300 less than a man.
Over the course of a working lifetime, this can lead to huge inequalities in retirement savings.
Savings and the gender gap
The report also said young women are among those struggling most to save for later life.
Just 46% of those in their 20s are saving the recommended minimum 12% of salary. This compares with 54% of men the same age.
Not saving more while young means women miss out on the benefits of compound interest – interest on interest which has previously been built up – which can boost savings pots substantially.
Jackie Leiper, managing director of workplace savings at Scottish Widows, said: “While we’re heartened at the record levels of saving, there’s still a mountain to climb before we reach true gender pension parity.
“Women face decades of extra working before they’ll have a pension to match that of a man’s, which is unfair and unacceptable.
“Until we can resolve structural inequalities, from the gender pay gap to the uneven division of labour at home, we will never have pension equality.”
She added: “We’re calling for urgent pension reforms that will help more women save more for retirement, including improved childcare provisions, enhanced pensions for those on maternity leave, the inclusion of pensions in divorce proceedings, and the scrapping of the (workplace pensions) auto-enrolment minimum earnings threshold.”
Two major surveys, one involving more than 5,700 people and another with more than 2,200 people, were carried out for the report.