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Women and Pensions Fact Sheet

Introduction

We now live in a gender-neutral society – or at least, that’s what we believe to be the case. Yet women face far bigger problems when it comes to receiving a decent pension at retirement than men.

Here are some facts:

• There are just over 10 million pensioners in the UK and 64 per cent of these are women. Earlier male mortality rates mean women form an even larger proportion of pensioners aged 75 and over

• Recent figures from the DSS for recently retired people (men aged 65 and women aged 60) show on average, today's single women pensioners have an income £24 a week lower than single male pensioners

• Only 13 per cent of all female pensioners are entitled to a full state pension. Twice as many women as men have to rely on the means-tested minimum income guarantee

• Research in January 2004 by the Fawcett Society, a women’s campaign group, found many as one in four single women pensioners now live in poverty.

Pensions and divorce

Although new rules that allow pension sharing at divorce were introduced in December 2000, in practice few women have benefited.

Out of about 300,000 divorce settlements by 2003, pension sharing has been included in only 1,300 of them, according to a research paper for the Department for Work & Pensions publishes at the time. While more recent figures are not available, anecdotal evidence suggests this remains the case.

In effect, women prefer a “clean break” divorce settlement, without realising that their retirement may be compromised as a result.

Earnings and pensions

To get a good retirement income, you need to have worked full-time in a well-paid job and stayed there for a long period of time. This ensures a good occupational pension, plus the fullest state pension.

Women working full-time still only earn, on average, about 80 per cent of male full-timers’ hourly rate. Women who work part-time earn just 60 per cent. This means their occupational pensions, where available, will be smaller.

Amongst women aged over 65 the average time in employment was just 27 years, with only 19 of those in full-time employment. For married women, the amount spent in full-time employment is 17 years.

Why does this happen?

Women are more likely to take on caring responsibilities (children and elderly parents) and therefore take time out of the labour market, affecting the contributions they make to company or personal pensions.

Women are also more likely than men to be low-paid and to work part-time; affecting their access to occupational pension schemes and their ability to pay into any pension scheme.

Research for Halifax shows that women are less likely to save, save less each month and are less likely to have pensions provisions. If they do save, women are more likely to do so in cash than men, who are more likely to invest in shares. Over long periods, shares outperform cash savings.

When those who did not save regularly were asked why, 70 per cent of women said they could not afford to, compared with 58 per cent of men.

Live longer, earn less

Once women reach retirement, they lose out again through lower annuity rates than men, because of their longer life expectancy.

For instance, in April 2007 a woman aged 65 with a £100,000 fund could buy an index-linked, single life pension worth about £4,600 a year, compared with £5,100 a year for men, according to the financial advice firm Hargreaves Lansdown.

The disparity grows as men and women grow older.

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