Gender pension gap falls, but women must work to 100 to rival men

More women put money aside for retirement, but the average woman needs to work 37 more years to have the same pension as a man.

The gender pension gap is at its narrowest on record, but women still face working beyond age 100 to catch up with men, research claims.

A report by insurer Scottish Widows has found the gap in pension wealth between male and female savers has closed to just 1%.

The company said this was because more women are putting enough money aside for a comfortable retirement, with 59% now saving adequately compared with 60% of men.

Despite this progress, lower pay and a higher proportion of women working part-time means those saving adequately on the median wage are still putting away £1,300 a year less than men.

This means for the average woman to save the same amount into her pension as a man she will need to work an extra 37 years - which would take her over the age of 100 if retiring at the state pension age.

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Scottish Widows said young women are among those struggling most to save for later life.

Its research found just 46% of those in their 20s are saving the recommended minimum 12% of salary. 

This compares with 56% of men the same age, and to almost two-thirds of women in their 50s, suggesting that women do tend to save more as they get older.

Scottish Widows warned that the extra childcare commitments that fall on women reduce the number of hours they can work, limits their earnings and therefore reduces their pension contributions.

This is amplified by the pandemic which has shut down and limited sectors where women are more likely to work, such as hospitality.

Jackie Leiper, managing director of workplace savings at Scottish Widows, says: “While we’re heartened at the record levels of saving, there’s still a mountain to climb before we reach true gender pension parity. 

“Women face decades of extra working before they’ll have a pension to match that of a man’s, which is unfair and unacceptable. Until we can resolve structural inequalities, from the gender pay gap to the uneven division of labour at home, we will never have pension equality.”

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Tens of thousands of retired women also get less state pension than men, but are now in line to get an extra £100 million.

Many married women who reached state pension age before April 2016 were entitled to receive a rate based on their husband's national insurance record, but an investigation found many have missed out.

Before March 2008, a retired wife on the lower state pension rate had to claim for an uplift worth 60% of her husband’s state pension.

This was supposed to have been automatic after March 2008. However, former pensions minister Steve Webb, now a partner at consultancy LCP, has uncovered cases where women were unaware that they had to previously make a claim or have not received the correct amount.