Why women cannot afford to put off pension saving

Career breaks, caring for relatives and a tendency to bump their own financial well-being to the bottom of the list mean women are failing to save enough for retirement.

Worrying figures released this week from the Scottish Widows annual UK pension report reveal that just 40% of women aged 30 to 50 are making adequate pension provision.

The number of women saving for retirement is not the only concern, it is also the amount they are saving. According to the report the average saving ratio for a woman is 7.5% of income, a decrease on last year when it stood at 8.8%.

Chronic under-saving among women is nothing new, but economic conditions are making it worse, said Lesley Mackintosh, chief executive of Independent Women in Edinburgh, which specialises in giving independent financial advice to women.

‘The problems with women saving are the same old things we have been battling for a long time,’ she said. ‘With the global economic conditions as they are, the first thing is to cut back on things that aren’t a necessity, and women cut back on pension contributions.'

Tough times

Women control the budget in the majority of households. Bright Grey research puts the figure at 71%, and they are more likely to see their husband’s pension contribution as a necessity than their own, despite women living longer than men. They are also typically more willing to cut back on their pension than see their family go without.

‘Women are more inclined to drop back their pension contributions. It is inbred in us to put the family first, and when we look at where we can cut, we say "I can’t cut my daughter’s ice skating" and so the pension contributions get cut,' Mackintosh said.

‘When women look at the monthly budget and see their husband’s pension provision going out, they don’t cut that because it has to be paid, like the mortgage. But they don’t think like that about their own pension.’

If a family is having financial problems, Mackintosh urges women not to stop paying into their pension but to rather lower the contributions for a set period of time and then review it later. This prevents women putting their own pension on the backburner for the sake of their family.

‘If you are going to drop back your pension contributions then do it for a specific amount of time. Even if you have to drop it back to the minimum amount, only do it for six months and review it and try to increase it again,’ Mackintosh said.

Child-proof pension

One of the main reasons that a woman’s pension may be underfunded is the career breaks she takes while having children.

When a mother does go back to work she typically works part-time or flexible hours, which can alter the amount available to pay into a pension – although a survey by Scottish Widows last year showed that in 2010 some 29% of mothers worked full time.