The gender pensions gap will take at least 20 years to close unless “decisive action is taken”, says Scottish Widows.
According to the investment manager’s latest report on women and retirement, the current average gap in pension savings at retirement shows women trailing men by £100K.
While the company’s latest report shows progress has been made in trying to correct the problem over the last two decades, Scottish Widows finds that - based on current projections - it will take until 2045 to fully bridge the gap.
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The report also finds that two-fifths of women (42%) are currently on track to face poverty in retirement compared to just over a third (35%) of men.
Jackie Leiper, managing director at Scottish Widows, said: “Progress has been made on the gender pension gap over the last two decades thanks to game-changing interventions like auto-enrolment and improving equality on women’s pay and role in society.
“But we are still a long way from where we need to be. Without drastic action, the gender gap will take another 20 years to close, and there is a very real risk that we won’t see pension parity for many generations to come.”
How much will you need in retirement?
The amount you will need to retire comfortably will depend on your own lifestyle and spending needs.
Research by the Pension and Lifetime Savings Association suggests the cost of enjoying the finer things in retirement has shot up from £37,300 to £43,100 for a single person and to £59,000 for a two-person household.
The cost of a comfortable retirement includes spending around £130 per week on groceries and £80 a week per couple on meals. It also adds extra luxuries such as regular beauty treatments, theatre trips and a two-week holiday in Europe each year.
To achieve a moderate retirement, you would need a pension of around £23,300 to £31,300 for a single person and from £34,000 to £43,100 for a couple.
The cost of a moderate retirement is based on spending around £100 a week on groceries, £60 a week on eating out, running a small second-hand car, having a week holidaying in Europe and a long weekend break in the UK.
For a no frills type of retirement, you would still need a pension of £14,400 – up from £12,000. For a couple, this has jumped from £19,900 to £22,400.
This cost is based on £95 for a couple’s weekly groceries, a week’s holiday in the UK, eating out about once a month and some affordable leisure activities about twice a week. It does not include the budget to run a car.
How can stay at home parents build a pension?
If you are a stay at home parent, there are some things you can do to ensure you continue to build a pension.
- State pension - make sure you look after your state pension by registering for child benefit (regardless of your household income threshold). This ensures you receive National Insurance credits that go towards your state pension - also take a look at our article - how much state pension will I get - to work out your state pension.
- Track down lost pension pots - you may have some savings from the past employment that can really add up.
- Set up a personal pension and contribute when you can. And do not forget, you also benefit from 25% tax relief when you pay into a personal pension, so every £800 invested is worth £1,000.
