Good news for women's pensions

There's been a sharp rise in the number of women saving adequately for retirement

Updated: 
Good news for women's pensions

In amongst the doom and gloom there was a bit of good news last week.

After I'd received news of the latest round of fines being imposed on the banks and before I was told that most of us will go into debt paying for Christmas I got an email that raised a smile and a small internal cheer: "Number of women saving adequately for retirement leaps from record low in 12 months."

It seems that while the bank bosses were fixing the markets in their favour and the debt companies were encouraging us to spend more than we earn, us ladies were quietly squirrelling away more and more money for our retirement.

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Half of the female population are now preparing adequately for their retirement, according to Scottish Widows, up from 42% two years ago.

"Women have historically lagged behind men in retirement savings but the recent pensions changes are giving women new opportunities to build a more comfortable retirement," says Lynn Graves, retirement expert at Scottish Widows.

The increase in the number of women saving into pensions isn't because we've all suddenly woken up to the importance of having money in our old age. Really it is a result of pension changes that are being gradually introduced that mean we are all automatically enrolled into pensions by our employers.

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But, that does mean there is more good news. We're saving more into our pensions because more of us are employed. The recession hit women's finances more than men as far greater numbers of women found themselves unemployed.

Last year a study by the Fawcett Society found that three times as many women as men were long term unemployed. Over the past two years the number of women employed has risen by over half a million to a record 14.4 million.

More women earning, more women saving, more women facing a brighter retirement. Good, good, and good.

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It has never been more important for women to be out there earning their own money and building up their own nest eggs. In the past – and indeed still today amongst the older generations – women have been reliant on their husbands for their retirement income. That was because men went out and earned the money and did all the pension saving.

We live in a world now where fewer of us are getting married, and of those that do many will get divorced.

Current data from the Office of National Statistics shows that 40% of marriages won't make it to their 20th anniversary. The chances of you being single when you retire are increasingly high. That means you cannot depend on your husband or partner's pension.

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So, save into your own pension and you are building a nest egg that will allow you to be an independent woman your entire life.

The only fly in the ointment is that while 50% of women are saving adequately for their retirement the other half are not.

And, those that are saving still aren't saving as much as men. The research by Scottish Widows found that 55% of men are saving adequately, so women aren't far behind. But we are saving less.

On average women save £206 each month for their retirement, whereas men save £298. This too is fairly easily explained, most of us are saving a percentage of our earnings and that percentage is probably the same across the genders, it's the pay gap that is causing a pension gap.

So, there are two options, and really we should be working on both. We have to fight to close the pay gap amongst older workers (men and women in their 30s earn broadly the same and women actually earn slightly more in their 20s), and we have to save a little more into our pensions to make sure the income gap doesn't continue into our retirement.

There is still work to do before women face an equal financial future to men, but at least there is some good news. Half of us are going to be able to afford our own retirement and as long as that number keeps rising we are moving in the right direction.

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