Women nearing retirement have less savings than men
The government and many financial experts have long expressed fears about the failure of many people to save enough for their retirement.
Those fears could hardly have been allayed any when, earlier this year the financial services group Prudential published survey results suggesting that as many as one in seven people retiring during the course of 2017 had no occupational or private pension plan at all, so needed to rely entirely on their State Pension.
The survey also found that more than one in ten (11%) of those retiring this year intended to survive wholly or partly on a State Pension.
The current State Pension returns an annual income of some £8,300 (£159 a week), whilst the Joseph Rowntree Foundation’s barest Minimum Income Standard in retirement is more than £9,700 a year (£186.77 a week).
That worrying background picture is thrown into starker relief by the publication by the Telegraph newspaper on the 14th of November of expert evidence recently given to the Treasury Select Committee about the vulnerability of particular groups when it come to a lack of financial provision and planning for retirement:
- probably one of the most glaring distinctions is the size of the average women’s pension pot, compared to that of men’s;
- amongst women approaching retirement and aged between 60 and 65, their average pension savings are a mere £55,000 – approximately half that of the average man;
- an estimated 3.5 million women have defined contribution pension schemes – where retirement benefits are based on the money paid into the scheme, how long that sum has been invested, the return on the investment made and the charges made for management of the pension fund;
- the number of men with defined contribution pension schemes, however, is more than double the number of women;
- the evidence also points to young people failing to start saving enough for their eventual retirement;
- in their case, commented the experts, young people’s inability or reluctance to save comes in the wake of 15 years during which earnings have remained more or less stagnant, whilst the cost of living has continued to increase;
- given an opportunity to increase their contributions to any autoenrollment pension scheme or to save the money as a deposit for a home of their own, young earners are likely to choose the latter;
- owning a home of their own offers an escape from the uncertainty of spiralling rents, whilst low interest rates made long-term savings especially unattractive.
The experts also commented to the Treasury Select Committee that an estimated 70% of government spending designed to encourage more people to make better provision for their retirement by saving more seems to be directed towards the 15% of the population who are already sufficiently wealthy to plan adequately for their retirement.
Concerns were also raised about the possibility of some people being inappropriately encouraged to opt out of those few defined benefits schemes which still exist. Since defined benefit schemes – based on the individual’s earnings whilst in employment – are widely regarded as more valuable than defined contribution schemes, there is a risk of people losing out on such benefits.
This data is correct as at the time of writing.