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14 Feb 2018

Pension savings gap widens with age

The gender pay gap, coupled with time spent out of employment to raise children and act as caregivers, means that women tend to build up much smaller pension pots than men.

According to research by Aegon, by the time women reach the age of 50 they have on average only half the pension savings — £56,000, compared to £112,000 saved by men.

This means that a 50-year-old woman would need to pay an extra £360 a month into her pension to catch up with her male counterpart.

It´s perhaps not surprising, then, that half of women (49%) say they´re not confident about having a comfortable retirement, compared to only a third (33%) of men.

Kate Smith, head of Pensions at Aegon, commented: “It´s shocking that 100 years after women secured the vote, we have a gender pay gap across every occupation. The fact that the pay gap filters down to mean women receive lower pension incomes is a double blow.

“When you factor in that women´s ability to save is further interrupted by breaks in their career to raise a family or care for elderly parents, the pension gap reaches epic proportions, making it difficult to catch up.

“Gaps in pension savings history leave you worse off in retirement — but for women who take time out of their career this is unavoidable and could mean they have to work longer to make up the shortfall. However, the earlier women are able to address the shortfall, the better. Our figures show that women in the early part of their career are within touching distance of men´s overall savings — by the time pensions freedoms are an option, the pension pots of men are out of sight.”

So, what can women do to increase their chances of a secure retirement? A key starting point is making plans and reviewing your savings, says Aegon.

More than one in four (28%) women don´t know how much they´ve saved, compared to just 9% of men, putting them at a further disadvantage. Having a clear overview of your savings and estimating your income needs in retirement ensures you can assess whether you are on track and set a realistic plan.

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