Talk Money Week: The pension contribution gap

FT Adviser today published details of Scottish Widow’s latest Women and Retirement report. While it's welcomed that nearly the same percentage of women and men are saving for later life, this report sets there is inequality between the sexes in the amount saved in the pensions.

The gender pay gap and the fact many women work part time, means on average women are saving £1,300 a year less than their male counterparts. This means women would have to work in the region of an extra 37 years to achieve the same level of pension as men. It is though the Covid-19 pandemic will only exaggerate the pension gap.

The report found only 46% of women in their twenties saved the recommended 12% of their salary in order to save for later life. Scottish Widows are calling for pension reforms to enable women to save more for their retirement and to plan for later life.

Discussing money, wages and pensions can be a sensitive topic and one many shy away from discussing. However it is vital to discuss your retirement plans with a financial advisor from a young age to ensure sufficient funds are saved. 

The Money and Pensions Service (MAPS) are holding their annual Talk Money Week until the 13th November, and such events are useful in starting those conversations on money and pensions. MAPS's research has shown those who discuss money with others, including advisors and their family make better and less risky financial decisions, help their children form good lifetime money habits and feel less stressed and more in control of their finances.

Planning for later life is crucial. Many people put off saving for their retirement and later life care until another day and sometimes leaving it too late to save adequate provision.

At the moment there are no compulsory schemes for saving for later life care. Therefore it is up to each individual to make sure they have adequate savings to fund not only their retirement but also any care they will need. 

Although at the moment the local authority’s fund care when a person has limited capital assets, this funding is limited. Often when the local authority is paying for the care it is necessary for this to be in a care home and the local authority dictates which care homes and the level of care. Having a savings pot provides choices for your care, for example care at home or a more specialised care home.

It is therefore important that we all ensure we have sufficient savings for later life and put these plans in place as soon as possible.

“Women face decades of extra working before they’ll have a pension to match that of a man’s, which is unfair and unacceptable. ”