Saving for retirement ‘not given a thought’ by young women
Young women have picked up the bad habits of their parents when it comes to savings and pensions which could lead to widespread poverty amongst future generations, according to the sixth annual Scottish Widows Women and Pensions Report.
Based on a sample of more than 5,000 adults, the report uncovered a disparity between pension provision and attitudes to long-term savings amongst both older women and younger women compared to men of the same ages. A significantly larger number of women over the age of 51 are saving inadequately compared to their male counterparts.
There is widespread uncertainty amongst women about their long term financial future and their retirement income. More than half of women under the age of 50 admit that they are not preparing adequately for retirement, a rise of eight per cent on last year's survey. Currently two-thirds of pensioners living in poverty are women - the report suggests this imbalance could worsen.
Younger generations fail to save
The report shows that young women have picked up the bad habits of their parents' generation. Younger women (aged 18 - 29) have typically accumulated just over half of that achieved by young men (£4,816.50 on average compared to £7,709) and they are saving just £49 per month, compared to £111 per month for men.
Moreover, the report revealed that one in three (31%) young women without a private pension have never thought seriously about saving into one. And of those young women that do have a pension, four in ten don't know what the pension is, compared to one in four men. This may be the result of the general attitude of female savers to pensions, with more women than men considering pensions as ‘risky' (42 per cent compared to 36 per cent). The report suggests better education on how pensions work and the range of savings products on offer is needed.
Older women
The report shows that young women have picked up the bad habits of their parents' generation. Older women are not only facing huge problems with insufficient savings but are also uncertain how they will plug the gap. Women aged 51 - 59 have accrued on average just £37,642 in retirement savings, compared to the £54,345 saved by men. Their pension provision is also much lower.
Furthermore, whilst almost half of older men (48 per cent) say the recession has had no impact on their ability to save, only 38 per cent of older women say it has not affected them. This may in part be due to the sizeable fall in the number of women aged 51 - 59 in full time work in the last 12 months - down from 41 per cent to 33 per cent. As a result over 42% of older women say they are pessimistic or very pessimistic about their retirement compared to 32% for men of the same age. More positively, women aged 50-59 appear to be making a real effort to reduce their debts, with a fall of over 20% in the last year, although the average owed is still almost £8,500.
Ian Naismith, Head of Pensions Market Development, Scottish Widows, said: "The findings relating to this year's report paint a worrying picture. Women are saving less than they were a year ago and younger women are saving the least, which is especially worrying as savers tend to stick to habits developed when they are young. In previous years we have seen younger women becoming more financially independent, but as that group moves into their 30s it appears that those coming behind are not continuing the good work. Attitudes need to change and the major disparity between male and female saving habits needs to be resolved or even more women will face poverty in their old age."
"We've found that three in five women under the age of 30 say they have a pension arrangement, two in five of these don't know what it is and only one in nine say they have an individual personal or stakeholder pension. We should place special attention on younger women to ensure they have the best chance of decreasing their burgeoning retirement savings gap. We believe that auto enrolment, coupled with better pension and long-term savings education, are the key elements to improving retirement provision in the UK.
"Indeed, a measure of the success of auto-enrolment reforms should be the extent to which they encourage savings among young women. Whilst everyone generally accepts they will have to work for longer and retire later, they cannot hide behind this if the right saving plans are not there in the first place."