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http://www.guardian.co.uk/money/2010/oct/19/women-pensions-poverty-retirement

 

SCOTLAND - PENSION POVERTY LOOMS AS WOMEN

FAIL TO SAVE ENOUGH FOR RETIREMENT - REPORT

Young women are not making adequate provision for retirement and face severe financial hardship, finds Scottish Widows survey

older person holding cash

Women are facing severe financial hardship in later life through lack of adequate pension planning Photograph: John Stillwell/PA

Young women are heading towards poverty in later life by saving 50% less than men for retirement, according to a report published today by Scottish Widows. Women aged between 18 and 29 are saving just £49 a month compared to £111 a month for men, making average annual contributions of £4,816.50 compared to £7,709 made by men.

The sixth annual Scottish Widows women and pensions report, which questioned 5,000 adults, also revealed that one in three (31%) young women without a private pension have never thought seriously about saving into one. And of those young women that do have a pension, four in 10 do not know what the pension is, compared to one in four men.

Older women are not faring any better, with half the number of those aged over 51 saving adequately compared to men of the same age – and they are also uncertain as to how they will plug the gap. Women aged 51-59 have accrued on average £37,642 in retirement savings, compared to the £54,345 saved by men.

The report found widespread uncertainty among women about their long-term financial future and retirement income. More than half of women under the age of 50 admitted they are not preparing adequately for retirement, a rise of 8% on last year's survey. Two-thirds of pensioners living in poverty are women and the report suggested this imbalance could worsen.

Almost half of older men (48%) said the recession has had no impact on their ability to save, but only 38% of older women said the same. This may in part be due to the fall in the number of women aged 51-59 in full-time work in the past 12 months – down from 41% to 33%, according to Scottish Widows. As a result, over 42% of older women said they are pessimistic or very pessimistic about their retirement compared with 32% for men of the same age.

But Scottish Widows found that women aged 50-59 are making a concerted effort to reduce their debts, with a fall of over 20% in the past year, although the average owed is still almost £8,500.

Ian Naismith, head of pensions market development at Scottish Widows, said: "The findings paint a worrying picture. Women are saving less than they were a year ago and younger women are saving the least, which is especially worrying as savers tend to stick to habits developed when they are young.

"In previous years we have seen younger women becoming more financially independent, but as that group moves into their 30s it appears that those coming behind are not continuing the good work. Attitudes need to change and the major disparity between male and female saving habits needs to be resolved or even more women will face poverty in their old age."

Naismith said better education on how pensions work and the range of savings products on offer is needed. "Auto-enrolment, coupled with better pension and long-term savings education, are the key elements to improving retirement provision in the UK," he said.

"Indeed, a measure of the success of auto-enrolment reforms should be the extent to which they encourage savings among young women. Whilst everyone generally accepts they will have to work for longer and retire later, they cannot hide behind this if the right saving plans are not there in the first place."