Fears are growing that the coronavirus crisis could further set back women’s already inadequate pensions.
Two recent reports have highlighted the continued disparity between men and women in their respective financial outcomes in retirement.
The causes are clear – women take career breaks to have children, they are much more likely to work part-time around childcare needs, and many find themselves in less well-remunerated jobs including the hugely under-pressure NHS where they account for 77 per cent of the workforce – the solutions less so.
Other poorly paid employment includes hospitality and retail.
Of which, the latest annual Women and Retirement report from Scottish Widows states: “The economic position of women in these sectors is often much more precarious, reflecting the nature of work on offer.
“Part-time working is much more common, predominantly carried out by women. Pay is in turn generally much lower than in the wider economy, typically £14,000- £20,000 per year.
“Even before the crisis, many women in these industries were likely to be struggling financially and contributing little in absolute terms towards their pension. As the crisis continues and the Government’s support is eventually unwound, it is likely that many women will feel increased pressure on their already fragile financial situations.”
It adds: “Women are also more likely to bear the brunt of the effects of extra childcare needed during the crisis, and the potential knock-on consequences for their careers. Lost income today means poorer pensions tomorrow.”
The good news is that many more women are saving at an “adequate” level of 12 per cent a year such that they have pretty much caught up men.
The bad news is that this progress remains something of a smokescreen.
The report continued: “On average women earn much less than men. So today, while equal numbers of men and women are saving adequately, this translates into fundamentally different outcomes.”
With the median income in 2019 being about £30,400 for a man and about £19,600 for a woman, Scottish Widows has estimated a typical shortfall in retirement of £78,000 compared to men, and in some cases as much as £100,000.
A similar outcome has been projected by workplace pension scheme Nest.
It found that the average woman working full-time in the UK could have a £41,000 gender pension gap at retirement, but when part-time work was included, the gap widened to around £72,500.
Nest’s director of strategy and corporate affairs, Zoe Alexander, said: “Women face systemic challenges in saving as much as men do for their retirement – these begin at the start of their working life and have a ripple effect.
“It looks like the ongoing impact of Covid-19 could also disproportionately affect women and may further undermine their pension savings potential.
“In times of financial instability, where every penny counts, pension contributions can seem like a luxury. But starting early and continuing, if you possibly can, is the best way to futureproof your financial wellbeing in retirement.”
The position is even bleaker for Pakistani, Bangladeshi, Black African and Black Caribbean women who, according to Scottish Widows, are less likely to be active in the labour market and earn less than White British women.
It notes: “There are long-running inequalities in economic outcomes that put women from some ethnic minority backgrounds at greater risk from the economic fallout of Covid-19.”
What then can be done about all this?
Scottish Widows urges reforms be built on the success of automatic enrolment. It also calls for enhanced maternity support, affordable childcare, and the automatic inclusion of pension assets in divorce.
But it cautions: “These are long-running issues that will not be resolved overnight.”