The real root of women's inequality in retirement

Research has revealed that Scotland has the second-worst gender pensions gap in the UK. A report by Prudential has found that women in Scotland can expect to receive more than one-third less than men when they retire, with an average annual income of £10,029 compared with £17,539 for their male counterparts.

The media has largely focused on the fact that the gender pensions gap has narrowed, although this is because men’s income has fallen as opposed to an increase in the amount women are saving.   

Vince Smith-Hughes, Prudential’s retirement income expert, has advised ‘practical steps that women can take to improve their retirement income’ which includes maintaining pensions contributions during career breaks and making voluntary National Insurance contributions after returning to work.

However, such ‘practical steps’ are simply not an option for many women and do not address the real root of women’s inequality in retirement. Women are less likely to be in work and have access to an occupational pension scheme and when they are in work, they experience lower rates of pay and so are less able to contribute a pension. Research by Scottish Widows found that 71 per cent of women (compared with 60 per cent of men) cannot afford to save long-term while 23 per cent of women (compared with 17 per cent of men) are saving nothing for their retirement.

Women earn less over their lifetimes, have less savings, and less of a pension compared with men of equivalent age. As primary carers, many women have taken career breaks that have resulted in vast holes in their pension pots.   

At a time when women’s incomes are being squeezed by not only the UK Government’s extensive public sector spending cuts but also the rising costs of childcare, food and energy bills, it is not surprising that many women are unable to save for their retirement.     

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