Pension saving is often undertaken years before a person chooses to take their retirement, and leave the workforce. With savings accumulated over one’s lifetime, Britons are expected to cover the cost of their living, as well as achieving their retirement goals. Thankfully, there is also a State Pension sum at the disposal of retirees, but this is increasingly viewed as a safety net.
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However, while pension saving is important, so too is the discussion of the savings gender gap.
As a point of contention for many years, women are often found on average to have significantly less in savings than their male counterparts.
This may be due to a variety of reasons, including career breaks, or the UK gender wage gap, but it is likely to have a palpable impact on retirement.
However, new research has revealed a certain group of women are likely to fall behind even the lower savings put aside by the average UK woman.
It is divorced women who appear to be bearing the brunt of lower pension savings, according to research by pension provider NOW: Pensions.
The research revealed that in 2018, divorced women had a private pension income which was 42 percent smaller than the UK average – £3,880 compared with £6,650.
The new data reveals a stark gap, which the provider says is likely to be exacerbated by higher divorce rates alongside the impact of COVID-19 on women’s work.
Also outlined was the vast difference between divorced men and divorced women in terms of pension savings, which is likely to shock those considering a split.
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The median pension wealth of divorced men currently stands at £103,50, whereas the average for women is £26,100.
The report also revealed divorced women are twice as likely not to be saving anything at all for retirement when compared with divorced men.
A prime reason cited for this staggering gap is the division of assets during a divorce, and the likelihood that pension assets are not considered.
NOW: Pensions said seven out of ten divorce settlements do not take pensions into consideration, often leaving women worse off as a result.
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People have therefore been encouraged to take a closer look at pension saving, especially when deciding to split from a spouse.
Without doing so, it is highly likely divorced women could be significantly worse off as a result.
Commenting on the findings, Joanne Segars, Chair of Trustees at Now: Pensions, said: “From our extensive work on the gender pensions gap, it is clear that women who are also part of other under-pensioned groups, such as those who are divorced, will see a compounded impact on their savings for later life.”
Ms Segars accredited lower pension savings as the result of an inadequate ability to save throughout one’s working life.
She added: “This is often a result of outdated social norms, discrimination and unfair savings schemes.
“By uncovering the reasons that these groups face inadequate financial wealth in retirement, we can begin to look at the solutions that will ensure that everyone reaches retirement with a sufficient pension income as this has a direct impact on people’s health and wellbeing.”
Other research has routinely shown women are, on average, worse off than men in retirement savings.
To increase their pension savings, women are encouraged to avoid opting out of a workplace pension, as well as researching more into their pension scheme and its benefits.
Women are also encouraged to use a pension calculator to work out how much they should be saving, as well as planning for their retirement goals.
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