The Chartered Insurance Institute’s (CII) ‘Insuring Women’s Futures’ task force today (24 October) published a 20 page-long report titled Solving Women’s pension deficit to improve retirement outcomes for all, which analyses data deriving from sources including government statistics, pensions organisations and the pensions industry.
The research shows women today are living longer, are better educated and have greater access to career opportunities.
However, with earnings forming the basis for pension saving, the gender pay gap is contributing to women having a pensions deficit when compared to men.
Women today continue to retire with lower retirement incomes relative to their male counterparts - men’s weekly occupational pension over the last decade was 83 per cent higher than women’s, and they were receiving £29,000 more in state pension over 20 years.
A mere 24 per cent of women and 17 per cent of men have defined benefit pensions, with more women working in lower paid public sector roles.
The average male final salary pension (£62,900) is almost double that of the average female (£32,000), the research found.
What's more, the £35,800 average pension wealth is a mere fraction of women's financial needs in retirement and does not take into account life care costs amounting to an average of £132,000 for a 65-year-old woman entering a care home in the UK.
Figures published by the Office for National Statistics in September showed life expectancy at birth stood at 79.2 for a man and 82.9 for a woman in 2017.
According to Jane Portas, Insuring Women’s Futures committee lead on women's risks in life and PwC partner, women in Britain today contribute to the economy and society more than ever before.
She said: "A young British woman can expect to work until she is 70, do the lion’s share of family caring, and save hard for her retirement.
"And yet with lower lifelong earnings, she risks facing financial insecurity in later life, and the prospect of not being able to pay for her own care."
The introduction of pensions freedoms in 2015 has brought additional risks for women, with factors such as investment experience and access to advice contributing to a gender drawdown gap - older women are facing a 37 per cent retirement income shortfall compared to men.
The report highlights 12 financial ‘Perils and Pitfalls’ that impact women’s financial resilience throughout life and culminate in a pension deficit, including young women’s financial capability; the motherhood penalty and part time working; and improving how the insurance and personal finance profession serves women.
The Insuring Women’s Futures Market Task Force - made up of senior leaders from across the insurance and personal finance profession - will take steps to address some of the root causes of these.
Ms Portas said before long a third of the population, and more women than men, are expected to be above state pension age.
She said: "Today, on average, married men’s pensions pots are five times’ married women’s, with pensions dependencies between the sexes expected for many years to come.
"Changes in our work-life patterns, the rise in cohabitation combined and increasingly fragmented family structures means that modernising pensions is a must."
Sian Fisher, CII’s chief executive and chairwoman of the Insuring Women’s Futures committee, said "women’s lives and freedoms have changed for the better, yet society’s expectations of women have not".
She said: "By 2020, 12m people will be above the state pension age and, of these, there will be a million more women than men. Insurance and financial planning have a central role in supporting people to manage their financial risks in life.
"The findings in this report show there is much to be done to improve women’s pensions and financial resilience generally.
"In conjunction with our Market Task Force Manifesto, Insuring Women’s Futures calls upon government policymakers, regulators, the legal, insurance and personal finance and wider financial services profession to unite with society to realise positive change to create a sustainable retirement for all."
maria.espadinha@ft.com
