Women hit by pensions gender gap

Aviva research: Women hit by pensions gender gap
Women are feeling the impact of the pensions’ savings gap more than men, as new research from Aviva shows that men are considerably more comfortable engaging with their retirement savings than women. Because they generally live longer, earn less, and spend less time in the workforce than men, women are particularly vulnerable to inequitable pension policies. Without income from pensions to supplement welfare payments, women are much more likely than men to retire into poverty.Aviva’s landmark Mind the Gap pensions’ report, published last year, found that Ireland’s annual pension savings gap increased from €20.2 billion in 2010 to €27.8 billion in 2016, the joint-second largest pension’s savings gap in Europe. (Source: Research carried out by Ipsos MORI on behalf of Aviva, June 2016).

This year Aviva has put the spotlight on the ‘gender retirement savings gap’ in order to highlight the lack of pension provision amongst women versus their male counterparts. Our insight shows that whilst the economy recovers, the pension savings gap is not being reduced, and there is a specific need for additional awareness amongst women of the importance of saving for their retirement.

 

How much we need in retirement depends on our individual circumstances and hopes for the future – but there is a distinct difference between how men and women feel when they think about this subject. Almost half of women versus only 27% of men say they don’t understand pensions and investments, and a quarter of women admit they haven’t considered how much they would need for a comfortable retirement.

One of the starkest findings of our research is that just 8% of women feel they’re taking necessary steps to ensure an adequate level of income during retirement. Although still a relatively low, nearly three times as many men feel that they are taking the necessary steps, at 22%.

 

Mind the Gap

The gender pay gap in Ireland, which is currently 20 per cent (Source: Morgan McKinley Gender Pay Gap Report2016), means that men are effectively saving more without even thinking about it. Our ‘gender pensions’ gap’ is in the region of 37% (Source, Irish Times, 7 June 2017), a figure that has remained static since 2012.

The State Contributory Pension system and legacy issues such as the bar on women working in the civil service after marriage has reinforced this gap: currently 84% of those receiving a full State Contributory Pension are men. The fact that only 16% of women receive the full State Contributory Pension reflects a system poorly designed to support individual entitlement or to recognise the care work which women carry out. (Source: National Women’s Council of Ireland, Joint Committee on Social Protection, July 2017). Women’s pension entitlements, both State and occupational are also impacted by maternity leave and taking time out to care for their children. Women are also more likely to work part-time – in fact, women account for 70% of part-time workers in Ireland.

According to the 2015 Q4 National Household Survey, one in ten female workers expected their spouse/ partner’s occupational or personal pension to be their main source of retirement income. Our research shows a deep lack of awareness and engagement with their pensions among women: 10% more men than women are aware of how much they are saving for their retirement and twice as many men as women regularly check the value of their pension fund.

Thankfully, we are all living longer, more active lives and our good fortune in this respect should not become a financial burden. That is why we need to ensure that women – as well as men – understand the benefit of financial planning as early as possible in their careers. It is the responsibility of all of us who work in the pensions’ industry to ensure that we play our part in educating women about pensions.

We all welcome the Taoiseach’s recent announcement that a system of auto-enrolment in a pension scheme for all private sector workers will be in place by 2021. As we pointed out in our Mind the Gap Report 2017, such a move will raise the level of coverage across the population.  But the devil will be in the detail: we look forward to further information when the Government publishes its five year Pension Reform Road before the end of the year. It is important that the level of contributions to the proposed universal scheme should be adequate to fund retirement for private sector workers, men and women alike.

 

Taking action

Women need to start saving as much as they can as early as possible and resist the temptation to opt out of any workplace pension scheme, which could mean missing out on the benefit of an employer’s contribution.

Savers should also regularly review how much they have in their other savings pots. This is especially important for women returning to work from maternity or breaks in their career to take care of their children.

Unless otherwise stated, research was undertaken in June 2017 as part of Aviva Ireland’s three times a year Consumer Attitudes Survey. A sample of 1,000 Irish adults, 18+, participated in the survey. Data is weighted to match the profile of the population. This research was carried out by Ipsos MORI in accordance with the requirements of the international quality standard for market research.