More women than ever are saving adequately for retirement but the gap between men and women’s pension saving refuses to budge. New research from the Fawcett Society sheds an interesting light on the differing influences of male and female family members.
With only 52% of women saving adequately for retirement, compared to 60% of men (Scottish Widows, 2015), gender differences are being examined more closely as the industry and Government look to encourage female savers. At Scottish Widows, we’ve commissioned research and produced an annual report on women and pensions for over a decade and each year the differences in attitudes, knowledge and savings habits between men and women are striking.
In order to better understand some of the underlying causes behind the gap, we supported the Fawcett Society in commissioning further research with women aged 25 to 29 earning between £24,000 and £40,000 per year.
While many participants didn’t know about the range of information and guidance available and didn’t feel that the materials available are accessible and understandable enough, they would seek guidance from friends and family.
When asked about women in their life who had informed their pension decision making, some did cite their mothers as positive influence, but a number said, unprompted, that their father was the main influence on their pensions saving. Male partners were also described as key sources of advice.
That some women would be turning to men for information and guidance is perhaps unsurprising, our own research has told us that women are less likely to be confident than men in their understanding of financial products, especially pensions.
This dynamic seems to have mixed effects. In some cases the participants became better educated through the relationship and feel they had the skills and knowledge to go on to make informed decisions. But in others, the women handed over responsibility to a male figure, expecting them to be better informed.
“I’ll give it to my dad, he’ll tell me what to do and that’s what I’ll do.”
Elizabeth, age 32, nurse
This doesn’t only impact the decision at hand; it sets a precedent for future financial planning, as the individual doesn’t fully understand the full implications of the decision they’re making, and they don’t develop confidence in making their own financial decisions.
With the introduction of pension freedoms, people cannot follow a default retirement journey. Important decisions need to be made at several stages in a lifetime, and pension saving is something that should be continually reviewed as circumstances change.
The industry and Government need to address the underlying lack of knowledge which leads to women’s lower confidence in finance. We’re getting better at cutting out the jargon and making things easier to understand and need to take this further, with better, more engaging communications. At Scottish Widows, we’re seeing an increasing trend towards employers wanting to provide support specifically for their female workers. This is something we’re keen to encourage and we’re already working with schemes to help develop communications that reflect the needs and attitudes of this particular audience.
We also need to address the underlying issues that make some women feel finance is a ‘male industry’. There’s already a shift away from this, and a consensus appears to have emerged that banks and insurance companies benefit from a better gender balance in senior roles.
Information correct as at May 2016.