More than half of female employees admit to feeling financially unprepared for their retirement because of a gender savings gap, according to new research.
Close Brothers and the Pensions and Lifetime Savings Association have discovered that 51% of women feel financially unprepared, compared to around a third of men.
The Lifetime Savings Challenge Report 2017, which seeks to understand how employees are saving, where they need help, and the level of support available, reveals that there is a clear and distinct gender savings crisis in the UK which needs to be addressed. Only 23% of female employees feel well prepared for retirement, compared to more than a third of men (36%).
When it comes to pension saving, the average amount in a woman’s workplace pension scheme is less than half that of their male colleagues (£53,000 vs £120,000). Worryingly, women are twice as likely to have less than £5,000 in workplace savings compared to their male counterparts (29% vs 15%).
Looking at non-workplace savings, the research shows that while around a third of male employees have less than £5k in savings, this rises to two in five (41%) amongst women. The findings also reveal that female employees are saving nearly a quarter less than men in non-pension savings (£221 vs £305 per month), a difference of over £1,000 a year.
This savings gap is perpetuated by a significant pay divide, with the mean annual salary of women surveyed being £27,379 compared to £37,655 for men, nearly thirty per cent less. And this is key; 42% of female workers don’t think that they get enough salary and workplace benefits to save. This figure falls to 27% of men.
However, income is not the only relevant factor in savings activity. Financial confidence plays a significant role, with only a third (36%) of women feeling confident about choosing the right financial product compared to 45% of men. It is here that comprehensive financial education can have a real impact, but financial educators need to consider gender when planning their guidance.
Jeanette Makings, Head of Financial Education at Close Brothers said: “The savings crisis is thrown into stark relief when looked at under the lens of gender imbalance. Women are not only earning less and therefore saving less, but are significantly less confident about the savings options available and how to choose what’s best for them. Women are more likely to trust friends and family or personal savings websites, which are unlikely to be able to provide suitable and comprehensive information across the entire savings landscape.
“Financial educators, like employers, are better placed to offer guidance and information, but they need to consider the diverse needs of their audience, including what style and content suits the individual members of their workplace. We work closely with employers to deliver effective education incorporating different savings techniques, goals, and needs.”