Saving for a pension should be at the top of the agenda for people of all walks of life, yet it seems that there's a definite split between men and women. The gender savings gap has been apparent for some time and it's yet to close to any extent, with research from Aegon revealing that men have three times as much as women saved in their pension pots.
The figures show a shocking difference between the savings pots of men and women, with men having an average of £73,600 in pensions compared with women's £24,900. However, that's not to say there hasn't been some improvement – women's prospects are definitely better than they were a few years ago, as in April 2015 they had just £16,700 saved in pensions. They've also got far more saved for retirement in ISAs, up from £5,400 two years ago to £14,900 today, so it seems that the continued message about saving for later life is getting through.
A number of initiatives are thought to be behind this, including the ongoing roll-out of auto-enrolment, which is helping ensure everyone has a workplace pension. Then there's the introduction of the pension freedoms, which are having a clear impact – as a direct result of the reforms, 13% of women said they're now saving more into their pension, and 14% have realised that they need to plan more for retirement.
Fears over further Government tinkering with pensions is also thought to be encouraging women to save and reap the benefits while they can, but as Aegon points out, it could also be that women are simply becoming more aware of the need to provide for later life.
However, the extent of the gender gap highlights that problems persist, and much of it could be down to a lack of engagement. Indeed, 42% of women have never reviewed their retirement plans or taken any action to amend them, and only 19% have engaged with theirs in the last six months (compared with 24% of men), while 35% have no idea how much they have saved in their pension.
Barriers to engagement clearly remain, with 27% of women surveyed saying they don't understand the information provided, while 13% believe there's a lack of online services or information, and 11% actively avoid checking their pension savings for fear of seeing how little they have saved.
Unfortunately, this head in the sand mentality can do far more harm than good – by failing to take action, any shortfall has no hope of being made up, and it could lead to a worryingly meagre retirement.
"It can't go unnoticed that women have made some encouraging steps forward in saving for retirement, but the difference between men's and women's pension savings is stark," said Kate Smith, head of Pensions at Aegon.
"It's crucial that women actively engage with their pension savings; burying heads in the sand is simply not an option, so it's concerning that over a third of women in the UK don't know how much they have saved in their pension. Without this vital information, it's impossible to know what to do next. Knowledge is power after all, and the more they do now to build up their pension knowledge the better their retirement will be."
She pointed out that there are a number of reasons behind the widening savings gap, including the gender pay gap – figures show that the gap currently stands at 13.9%, so men are saving more through auto-enrolment "without even thinking about it", said Kate.
Then there's the fact that women often face "a more disrupted savings journey" due to maternity leave and raising a family, which often leads to working part-time. This means they're inevitably "on the back foot when it comes to pension savings" as their contributions are reduced, which is why it's so important to engage: "with the right preparation, arrangements can be made to fill the gap before it's too late."
Act quickly! It's hoped that the pensions dashboard – which will give an overview of all your pension savings in one place – will make the process of engaging with your pension far easier, but given that it isn't set to be launched until 2019, you don't want to hang around. Start making a plan and saving as much as you can from as early as possible, to give yourself the best chance of building a suitable pot.
Enrolling in your workplace pension is by far the best way to do that – you can benefit from employer contributions as well as Government tax relief – so don't opt out. If your workplace hasn't got a scheme yet, auto-enrolment means they soon will have, but in the meantime, save into an ISA instead (this could also be a great addition to your retirement savings plan alongside your workplace pension).
You'll want to regularly review your pension savings and retirement plan to make sure you're on the right track. There are various online tools available to help you work out the kind of retirement income you'll need, as well as the steps you can take to get there, and make sure to keep a close eye on the performance of your pension funds as well. Don't forget about the importance of professional financial advice, either, and with the right support, you'll hopefully be on track for the retirement you want, whatever your gender.
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