Women 'fail to save for pensions'

Caring for children often affects your ability to save

Women could face poverty in retirement because of a "gender pensions gap", according to research from the Association of British Insurers (ABI).

Up to nine million women are either not saving enough for retirement or are not saving at all, the ABI has said.

About 35% of women do not belong to a pension scheme compared to 25% of men, according to the research.

Women are also less able to save for their retirement, as their work is more likely to be disrupted by childcare.

Women are more likely to retire earlier and live longer than men and more likely to work for employers that do not contribute to pensions.

This means that almost two-thirds of women's income in retirement is from the state and many women end up on means-tested benefits to fund the income gap, the ABI said.

WOMEN AND PENSIONS 35% of women do not belong to a pension scheme compared to 25% of men When they do save, over half of women contribute less than £100 per month to their pension 9% of women receive an employer contribution of more than 5% of wages, compared to 15% of men 83% of retired women have a total personal income of less then £1,000 per month compared with just 58% of men Source: ABI

The ABI believes the government should encourage employers to contribute to their workers' pensions.

Under existing legislation, employers are not required to make any contributions, although many do.

Poor understanding

One major barrier identified by the report is the fact that few women understand pensions.

Only 3% of women have a decent knowledge of the issue and the ABI wants better information made available to women about pensions, particularly in the workplace.

"Women are clearly at greater risk than men of facing poverty in their retirement," said Joanne Segars, head of pensions and savings at the ABI.

"The savings industry, government and employers must work together to help women save for a decent income in retirement."

Your comments:

My first pension was stopped after only running it for 18 months before having a baby. When deciding to stay at home for my son's first year, I returned to work hoping to reinstate my pension and was told I was not able to do so. I since have taken out two other pensions. One I cashed in due to changing jobs and only having it run for just over a year and the other was a similar story. I opted out of Serps back in the 1980s in my mid-twenties and was recently advised to opt back in. Now at the age of 41 I have virtually no pension and have all existing funds allocated to childcare so I am not going to be able to start a pension until my kids have finished full-time education. If my youngest attends university it will be in another 16 years away, when I will be 57 years old. I guess I will not be able to retire.
Miss Yvonne Box, London, UK

Many women are simply priced out of the pensions market. A working mother with two children over two in full-time nursery care can expect to pay well over £1,000 per month in nursery fees - equivalent to a taxable income of £18,000. The State subsidies are complex and often not available because they are calculated on the basis of joint income. By comparison, nursery fees in Germany are around 300 Euros per month for two children, and nursery care is completely free in Sweden. For many women in the UK, this simply means that they cannot afford to go back to work after having a family, and that therefore they will be unable to contribute to a pension. Couple all this with a divorce rate approaching 50% and increasing female longevity, and it is clear to see why many women will end up in poverty in their old age. What is needed is some "joined up thinking" on behalf of the government. The emphasis has to be on creating affordable childcare for all, either directly by subsidising nursery places or by making nursery fees fully tax deductible.
Claire, Cambridge

Whatever the sex of the individual, private pensions are - I must reluctantly conclude - a con perpetrated on the public by an unholy alliance of government and the financial services industry. There were pensions scandals under the 80s Tories, followed by the Equitable Life scandal under New Labour, which it has done its best to bury. Is it any surprise that - whatever their means - people are increasingly reluctant to get involved in a financial product which has little real regulation? The ABI, it should be remembered, is an industry body, and this "survey" is actually a press release clearly intended to send more hard cash into the pockets of its members. Why do I perhaps seem a little bitter? Because I was in Equitable Life, saw the government wash its hands of it, and when I went to several "independent financial advisers" to try to sort things out, found that at least two of them denied that there had ever been any 80s pensions mis-selling.
Paul, London

Pensions are so confusing. I know I have one, but I couldn't say what it was or how it works. Halfway through the wads of paperwork I give up, baffled by financial jargon and percentage points. Why don't they teach you about this stuff in school?
Bec, Wales

One of the problems for women of my age is that they paid the married woman's reduced NI contribution while working, not realising that this did not count towards the state pension.
Gwen Newland, Tadley, UK

At present, I'm not saving money into a pension. I'm aware that this is the time I need to start (I've just turned 25) but right now I simply don't have enough disposable income - I am only managing to save £50 a month from my salary after payments on my mortgage, bills and student loan repayments. I allow £20 a week for entertainment and lunch, etc. I suppose I'm also a bit suspicious of the whole idea of pensions as well - I feel that I would rather have a savings account than a pension. This may be erroneous, but right now I need a fund in case of job movements or relocating, rather than to have money tied up in a pension.
Kate, Denbigh

Where is the proof that childcare is the principle reason why women are saving less? This sounds more like a politically correct assumption than a properly researched conclusion. Most mothers are married and therefore have a legal right to a proportion of their husbands' pensions in order to take account of their reduced earning and saving power while acting as the principle child carer. I suspect that the real reason is that many of the women who have a problem could save, but choose not to. Over the last few years I have seen my female friends in their '20s and early '30s spend vast amounts of money on designer clothes, expensive cars, endless evenings out, foreign holidays and other non-essential consumer spending. In the meantime, I have been saving to make up the shortfall for the first five years of my working life, when I was a postgraduate student and therefore unable to make any pension provision. To do this I drive a seven year-old car and have not gone on holiday abroad for over a decade. I agree that we need to find ways of helping those people - male and female - who were genuinely and through no fault of their own unable to save. But those who have the earning power to do so and choose not to only have themselves to blame if they face a significantly lower standard of living in old age.
Leo, UK

Pensions need to be more flexible - both men and women change jobs more than they used to. Any women who has children is likely to be out of work for years and so pensions need to allow for this. They also need to be easier to understand. Also why do you have to buy an annuity with a good proportion of the pension when it matures? If you've saved the money it should be yours to decide what the best thing to do with it is. Advise yes, make mandatory no.
Chloe, Scotland

Many women I find rely on their husbands pension scheme, unfairly I feel and that may be the reason they are not saving. We have no children, and my wife works in a job, but even though I pay all the house expenses (including shopping) and she keeps all her working salary I cannot persuade her start a pension scheme for old age. I think many women feel they are "owed" their husbands pension, since even in divorce they know they will get a percentage of their husbands salary, and therefore it is unnecessary to save.
Paul, Kingston

The pension industry is geared to employees staying at the same company throughout their working life. However, most workers nowadays will change companies several times in their life and employers will only contribute to their own scheme. In addition, many pensions load their charges into the first few years of a new scheme penalising those who change employer. The current pension system is outdated and inflexible in meeting the changing requirements of modern work patterns. The government by taxing pension incomes and soon further reducing the benefits of tax-free Isa is not sending the correct message to encourage long term saving for retirement.
Alan, Winchester

My wife worked full-time before we got married and earned more than I did but she had zero savings and no pension. She did, however, have a new car and more clothes than could fit in a 15-foot walk-in closet as well as a shoe collection that would rival Imelda Marcos. Typical? I don't know.
Name withheld, Bermuda

It is all very well for the ABI to keep banging the drum to get us to save and invest in pension schemes but before we do the following needs to be addressed: 1)Financial institutions need to demonstrate that our pension funds are secure and not subject to negative growth as has been the case over the last few years; 2)Government needs to change the existing annuity system so that we have a viable alternative to the seriously flawed existing system, biased heavily in favour of the financial institutions. 3)Payouts to IFAs and similar are regulated and curbed. Currently they get too much of the pot for very little risk.
Allen Barnes, Sussex

I think pensions are a waste of money. As soon as the stock market goes through a bad spell you here stories of a pensions black hole extending into billions of pounds. I thought pensions were supposed to be long term investments? Better of sticking to premium bonds or savings accounts; at least you know where you stand.
Bal Leal, Essex, UK

Private pensions are used as a form of "golden handcuffs". A company will pay into it while you are working for them but once you move job the pension is either frozen or you have to make a transfer of funds over to your new employer's pension fund, often with a huge penalty. This unfairly discriminates against women, or anyone else who starts and stops work during their life or changes employer frequently. Private pensions will not work until we all have a single private pension account for life. If an employer wants to offer to pay pension contributions as part of a wage or salary package you should be able to force them to pay into your lifetime personal pension account rather than have no option but to close your previous pension and start a new one.
Matthew, London, UK

Pension contributions are whittled away by the high fees of the pension companies. My wife had a £10,000 annuity fund, yet she receives only about £550 a year. If I had access to the fund, I could do better than this myself on the fixed-term market (and still have the capital sum to hand down to my children at the end of the day). The pension funds are simply giving you the interest and keeping the capital sum for themselves. Lets all have a good look at the simple arithmetic. Pensions are a very poor investment.
Dave , Perth, Australia