Women's pension savings still 'way behind' those of men

These are the stark figures on pension savings from both the Department of Work and Pensions and a study carried out by Handelsbanken Wealth and Asset Management among 4,000 UK adults.

According to the DWP, women's overall average income from the state pension was materially lower, at just £232 per week compared to £254 for single males.

The Handelsbanken survey revealed that 26 per cent - over a quarter of UK women - have no formal pension savings at all.

Christine Ross, head of Private Office (North) & client director at Handelsbanken Wealth & Asset Management, said: “Women on average continue to remain a long way behind men in pension savings, with the problem at its most acute among older generations who are closer to retirement."

Handelsbanken's study showed:

• 26 per cent of women have no formal pension savings at all, compared to just 16 per cent of men
• Only 23 per cent of women surveyed stated they are confident that they will be able to retire comfortably, with over a third (35%) believing they won’t be able to
• Male respondents’ pension pots were found to be significantly higher, averaging at £142,234
• Women’s pension pots came in at just over a third of this, at an average of £51,384

This comes as the latest data from the DWP revealed that women are far more likely than men to be solely reliant on the state pension for their retirement needs.

According to the DWP's Households Below Average Income: an analysis of the UK income distribution report, there was an "increase in material deprivation was recorded for pensioners, and in the measures of combined low income and material deprivation for both children and working-age adults", with benefits 

The data said state pension and other benefits represented 56 per cent of single pensioners’ incomes in retirement and 38 per cent for pensioner couples in 2021-22.

But this rises to 61 per cent for single female pensioners aged 75 and above.

As reported by FTAdviser, the below-inflation uprating to the state pensions will have had a disproportionate effect on women. 

After decades of gender disparity, it’s encouraging to finally see clear evidence of change.Christine Ross, Handelsbanken

According to Jon Greer, head of retirement policy at Quilter: “This lower uplift was felt even more keenly by female pensioners, who on average were more heavily reliant on benefit income – that includes the state pension – than male counterparts.

"In FYE 2022, benefit income made up 60 per cent of total gross income for single female pensioners, compared to just 48 per cent for single males. What’s more, single female pensioners’ overall average income was materially lower, at just £232 per week compared to £254 for single males."

The situation has changed little since March 2022, when ONS figures showed a "shocking" pensions inequality, as reported by FTAdviser at the time.

Positive changes

But it was not all bad news. According to Handelsbanken, younger women are becoming more in charge of their financial futures. 

The study also showed that while women over the age of 40 were generally less likely to have a pension than men of a similar age (63 per cent compared with 80 per cent), men and women in their 30s were found to be equally likely to have a pension (77 per cent).

For adults under 30, women were found to be more likely to have a pension than men (76 per cent vs 59 per cent).

Education around pensions needs to be improved.Christine Ross

Ross said: "After decades of gender disparity, it’s encouraging to finally see clear evidence of change, with pension take up reaching parity among 30-somethings, and women in their 20s ahead of their male counterparts."

She added recent steps taken at a government level have the potential to further close the gender pensions gap, including the free childcare scheme expansion announced at the Spring Budget, which should allow more working mothers to return to the workplace and build their pension savings.

But despite signs of progress, Ross said there was still considerable work to be done.

She added: "Education around pensions needs to be improved, as does women’s confidence in financial products. We strongly encourage seeking advice on long-term financial planning where possible, to ensure that the plans you have in place are fit for purpose on an ongoing basis."

simoney.kyriakou@ft.com