Let’s make retirement better for women


Jill Henderson

Jill Henderson

Head of Business Development

Let’s make women’s retirement better

Report shows the stark financial challenges many women face.

For the past 19 years we’ve been reporting on women’s financial resilience in our industry-leading Women and Retirement Report (PDF, 4MB).

Over that time, we’ve highlighted the gender pension gap and how much worse women’s retirement prospects are compared to men. That’s still true today, despite the positive changes brought about by auto-enrolment since 2012.

As our recent Women and Retirement Report shows, on average women are on track for £12k per year of income in retirement in today’s money, compared to £19k for the average man. It’s a figure based on Scottish Widows’ National Retirement Forecast that includes their private pension pots and state pension, with housing costs deducted.

That’s a gap of £7,000 a year, every year. Just consider what that means for women’s quality of life in retirement. Overall, women are on track for a £148k private pension pot compared to £234k for men, in today’s money. 

We do have to recognise that there are some particularly vulnerable groups of women whose retirement outcomes are much more precarious.

Divorced, single women and single mothers are on course for much worse outcomes without a partner to share living or childcare costs or benefit from a man’s higher pension savings. 

Most women (over 60%) don’t discuss pension assets during divorce, usually because they don’t know they can or should; or they have no idea of the potential value of a spouse’s pension. Yet a pension can be worth more than the family home.  

The result is that around 60% of divorced women are likely to have less than a minimum lifestyle in retirement compared to 39% of women generally, as referenced earlier, and only 10% are on track for a comfortable lifestyle.

Single mothers – and there are 2.5m of them in the UK – face the most challenges of all with their income expected to be just £10,000 a year as they battle a lack of affordable or available childcare and cut work hours to look after their children. Around half of single mothers (51%) struggle to find a new job. 

That’s 3 in 4 women who are single parents who find their financial and career prospects massively impacted right through to retirement. 

Those are stark figures and it’s why I’m so motivated to help drive much-needed change.

Why are we still seeing this? It’s a multifaceted and societal challenge, with some overarching drivers.

Firstly, women typically embark on careers or roles with lower pay.  The average female who is saving towards a pension earns £28k whilst the figure for a man saving into a pension is £43k.  When we then layer on taking time out for parental or caring responsibilities they face a triple whammy of detractors for their future pension with decreased earnings, decreased pension contributions during their period of absence, and there is also the decline in career progression and earnings potential when they return. 

Secondly, childcare costs are vast. On average it costs £14k per year for full-time professional childcare at a nursery for a child under two in the UK. So, we can understand why reducing working hours is attractive. As many as 37% of women have given up work to look after their children, with cost being a key factor.  

Childcare responsibilities are still unequal, with 50% of fathers saying they share childcare equally but only 31% mothers believe this to be true. Fifty-six per cent of mothers say they do most of the childcare. Some grandmothers also cut back on work to take on childcare. 

There is good news emerging though because we’re starting to see change with the younger generation splitting childcare more equally. 

Finally, cost-of-living pressures are still with us and people are still struggling; and for some women, it makes it even harder to save for their future. This is even higher for more vulnerable groups.

What can we do about women’s retirement prospects?

But the question must be: what can we do about it? And by ‘we’ I mean government, employers, advisors and providers all working together to really drive change for the better.

We need to expand auto-enrolment reforms even further

We know that the current 8% contribution levels aren’t likely to be enough. Should that be the next step? We now think that 15% is more realistic.

Divorce changes

Pension assets should be made a mandatory part of legal proceedings – or perhaps a joint ‘family pension’, to be split should a couple divorce.

Greater equality and childcare support for parents

Good, affordable, available childcare especially for single parents and lower earners:  I welcome the government’s proposal to introduce free childcare from 18 months and increase the number of hours.  This is planned to fully come into effect in 2025, and we know this will be challenging. 

No doubt there are more things that can be done. Engagement certainly springs to mind. 

I’ve certainly made plenty of financial mistakes and missteps through my own life events; at a time when I should have thought more about my longer-term saving, I didn’t. I worked part time, I stopped working through maternity and put a pause on my career progression to focus on my daughter, Jessica, who is now 14.

We want things to be better for the next generations, including my daughter, so that she is not financially vulnerable in later life.



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