Calls for better pension incentives and flexible savings for women

At the launch of its fifth annual Women and Pensions Report, Scottish Widows called on the Government to introduce better pension incentives to encourage women to save. The report has revealed that women are still falling far short of men when it comes to pensions savings. Just 47% of women who could and should be saving for retirement are saving adequately compared to 59% of men (gender gap has increased by 3% since 2008).

Scottish Widows has called for the Government to review pension incentives to encourage more women to save into pensions. The proposals include:

Flexible long-term savings - Nearly one in five women (who expect to receive an income from a private pension) (18%) would be encouraged to save more for the long term if they could access part of their pension savings before retirement. This could be achieved through developing "feeder funds" which enable the individual to first build up a flexible savings pot before payments spill over into the pension fund. The Government and industry must therefore help to foster a stronger savings culture which equips women with access to the right products and greater sources of financial advice to build up sufficient long-term savings. This could see a natural alignment of current existing savings vehicles, for example, allowing employees to make contributions into an ISA wrapper.

Easier access to funds before retirement - Currently, pension funds cannot be accessed before the age of 50, rising to 55 in 2010. Given the short term planning horizons of many people, the concept of pensions "lock away" has been cited as a major obstacle to saving, particularly by women and those on low incomes.

Build awareness of pension needs - Money Guidance, the proposed national ‘free' advice service is intended to fill the advice gap, but this needs a multi-channel approach to accessing the scheme. Amongst women who said they were likely to use the national service the favoured method for accessing money guidance was through the internet (88%). But 57% of women aged 18-29 would prefer a face to face service.

A public campaign for personal accounts is required to tackle low awareness among women - support for personal accounts, which will be the main pension vehicle for lower earners, is not as strong amongst women where the general level of awareness of the scheme, remains low. Less than a third of non-retired women have heard of personal accounts, this compared to 40% in 2008.

Women should be encouraged to place more value in workplace pensions - men and women attach very different attitudes to the offer of workplace pensions when considered as part of the wider mix of workplace benefit. Men are more driven by "hard" economic factors such as pay, bonuses and overtime. Women are more motivated by "soft" social factors such as location, flexi-time and maternity leave.

Ian Naismith, head of pensions market development at Scottish Widows said: "For women, trying to save consistently for retirement it is often difficult as many take time out of working life to have a family, and they may put their families' needs over and above their own. While the Government has introduced measures in recent years such as allowing people to purchase missing National Insurance Contributions to help those with broken work histories, there is still more that can be done to narrow the gender pensions gap further by encouraging savings. When it comes to pensions savings there really isn't a one size fits all approach and if more is done by both the Government and the industry we can help ensure that women can enjoy a comfortable retirement.

"But it's also up to women to take their retirement savings into their own hands. The golden rule for pensions savings should be to put 12% of income aside for retirement but if women were given more encouragement to save that would help them achieve their retirement goals."

Men vs women - the pensions savings facts

On average women who are members of DC employer-arranged schemes are contributing nearly £90 a month compared to men contributing nearly £168

Of those contributing to a private pension scheme, women on average are contributing nearly £184 a month compared to men contributing nearly £331

A third of women (34%) have access to a DB scheme compared to 41% of men

Around a quarter of men (with a private pension scheme) (24%) are contributing to an individual personal pension compared to just 14% of women - this has fallen from 17% in 2008

On average women who could save more believe they could contribute nearly £83 more per month to long term savings compared to men who believe they could save £129 more per month

38% of women don't believe they can save anymore for retirement compared to 34% of men