By Rosie Murray-West

Much has been written and many hands have been wrung over the gap between women’s and men’s pension provision. Despite societal changes, the gender difference in the amount put away for retirement remains stubbornly high.

Men’s pensions are far bigger than women’s, meaning that when they retire they will have more to live on, while many women will be in a vulnerable position.

To illustrate, a recent survey by Aegon showed that 15 per cent of women had failed to pay into a pension pot of any kind, compared with 11 per cent of men, while 15 per cent of men had over £300,000 in their pension pot, in contrast to four per cent of women. [1]

According to the European Union, the average woman who is retired today in Europe, receives 40 per cent less in pension than her male counterpart.[2]

An historic phenomenon?

These are scary statistics, but it’s easy to dismiss the current gap in pension savings as a phase that the UK will grow out of. After all, today’s pension savings reflect the economic norms of yesteryear. You do not have to look back too far to find a time when men held the purse strings and women stayed at home to look after the children. Long career breaks and little involvement in financial matters are states of affairs that are unlikely to lead to fat pension pots.

Times have changed. Government figures show that 71 per cent of women now work, a 20 percentage point increase since 1971.[3] The gender pay gap, while still stark, is reducing. It fell from 10.5 per cent in 2011 to 9.1 percent last year[4], and new rules forcing companies to reveal their own gender disparities when it comes to salary should improve the outlook further.

Many younger women are becoming comfortable with managing their own money and investing it, too. A recent HSBC study looking at gender and investment concluded that there is a gap in financial literacy between the generations.

“There is a new wave of women with money to invest. There are more opportunities for women to invest nowadays because of demographics and the way the world is,” one of HSBC’s relationship managers said in the study.[5]

No room for complacency

In theory, this ‘new wave’ of financially literate and employed women should be salting away plenty for retirement. So is it enough for us to wait and assume the gender pension gap will sort itself out? Sadly, it seems we won’t be that lucky.  Although the EU names Britain as “above average” when it comes to sorting out the gender pay gap going forward, it cautions that the gap will remain.[6]

Some of this might be due to the nature of the employment market, or the design of the pension systems themselves, but there’s also evidence that women are not doing enough to help themselves pull up alongside the men when it comes to pension savings.

Studies identify the following barriers to female pension saving and investing :

Lack of confidence.

A recent study from the CII (Chartered Insurance Institute) says that more than half of women in their 20s say they don’t understand enough about the pensions landscape to make a retirement plan, compared with 38 per cent of men.

Lack of risk appetite

HSBC asked men and women whether they agreed with the statement “I do not like to take investment risks with my money. 72 per cent of women agreed or strongly agreed, against 54 per cent of men. This lack of risk appetite means that women are not exposing their savings to long term growth through investment.

Lack of funds and time in the workplace

The impact of earning less over a lifetime and taking career breaks to have children is also taking its toll. Fidelity International, which recently published a study called Financial Power of Women, dubbed this the “motherhood penalty” and the “good daughter penalty” – with women taking time off to care for children and elderly parents.[7]

What women should do now

In the midst of this gender-based gloom, there’s a call to action for us women who feel our pensions might be less than we’d like. We can’t be responsible for everyone’s pensions, but we can make a change right now, starting with ourselves.

Get friendly with risk

Risk is everywhere, and that is as true in our personal finances as it is when we cross the road or go on a trip. If we invest our money, we run the risk that it might go down as well as up. If we don’t invest it, we run the certain risk that inflation will erode the value of what we’ve got. Studies like Barclays’ Equity Gilt Study[8], which looks at how investments perform over time show that the value of investments nearly always outperforms cash when you’re saving for the long term.

Get informed

There’s more information out there than ever before about how to invest and save for retirement. Free resources include the Government’s websites about pensions, as well as companies that help you to invest by buying funds and shares. Financial information services like Morningstar mean that no-one should be in the dark about how investments perform. If you’re still in the dark, consider finding an independent financial adviser – they can help give the confidence you need to get started, though you’ll pay for their time.

Share the burden

If you’re a member of a couple, your retirement savings shouldn’t be the ones that take the hit when you start a family or one of you focuses on dealing with family illness or household matters. Ensure you talk frankly about how your pension contributions can continue when you take a career break, with your partner or spouse contributing too. When it comes to pension investing, the earlier you start the better, so don’t just assume you can restart when times get easier.