Tuesday, 19 October 2010

Women and Pensions

Scottish Widows have today published their 6th annual report on women and pensions (1). The report makes an important contribution to understanding the situation facing women in the context of pensions.

Over recent years we have seen significant policy change which has increased the chance that women with caring responsibilities have access to full basic state pensions.

But whilst we have seen progress on the state pension, the report paints a worrying picture of a future generation of women who aren’t saving enough. The report reveals that 53% of women under 50 think they aren’t preparing adequately for their retirement, a rise of 8% from last year.

One area highlighted in the report is of changes in attitudes towards retirement age. The report reveals that for the first time in several years there was a rise in the age at which men and women said they would like to retire. That said, the aspiration of a retirement age of about 61 still seems very low compared what is likely to be the reality for the future generation of retirees.

Dr Craig Berry’s report for ILC-UK (2) highlighted the reasons why people retire when they do. His report also explored some very significant gender issues in relation to retirement. Women are more likely than men to retire above state pension age (admittedly a lower SPA at the moment), partly because couples make the decision about retiring at the same age.

Dr Berry also highlighted the fact that caring responsibilities play a major role in forcing people to retire early. Although interestingly, whilst he found that women are the main carers, caring responsibilities has arguably as big, if not a bigger impact on when men retire than women. This is partly because more women than men are likely to be working part time and are often already undertaking a caring role whilst managing a job.

The Scottish Widows report is a useful contribution to the debate about pensions and retirement. But it is clear that our aspirations for a relatively low retirement age are probably unrealistic, particularly given low levels of private saving. NEST will help, as will other new products and initiatives to encourage saving. Also important will be a move towards a more positive attitude from employers towards gradual retirement and flexible working.

But the underlying message from this report is clear. Whilst changes to the State Pension have reduced the likelihood of women not getting a full basic state pension, the aspiration of a relatively early retirement is not likely to be met unless we can find ways of saving much more than we are at the moment.

David Sinclair

(Also posted at www.ilcuk.org.uk)


1) Scottish Widows Women and Pensions Report. http://www.scottishwidows.co.uk/about_us/public_affairs/research_women_pensions_reports.html

2) Berry, C (2010) The Future of Retirement http://www.ilcuk.org.uk/files/pdf_pdf_134.pdf