Challenges facing women in retirement: An overview

This is part one of our three-part series focusing on the challenges women face in their retirement. This entry provides an overview of the situation and why women are more likely to have lower retirement income than men.

One of the difficulties for women in retirement is their likelihood of having small pension funds. In the Pensions Advisory Service (TPAS) Women and Pensions 2014, Baroness Patricia Hollis explained that "Pensions are attached to the labour market and women are much more likely than men to work part-time and be in low paid service-sector jobs, as they weave paid work around their caring responsibilities for children, family and elderly parents. The price they pay is an incomplete State Pension in their own right and not much, if any, private pension to add to it."

A crucial point Hollis raised was that women have traditionally relied on their husbands for pensions - but half of marriage now ends in divorce. Consequently, "many women go into retirement having to rely on means-tested benefits, unaware that they could perhaps have done better than that."

Michelle Cracknell, chief executive of TPAS, preceded the report with the specific barriers women face when trying to achieve a good retirement income: "on average lower level of income throughout their working life, impact of career breaks and carer responsibilities and lower levels of confidence around their financial products."

The situation is similar for self-employed women, too. The Resolution Foundation's report Just the Job - or a working compromise? states: "women (whose earnings are lower than men's) now make up more of the self-employed than they did in 2006-07, while female employee levels have been flat" and that "median self-employed weekly earnings have fallen across the board, and to similar extents. As with employees, the earnings of women have fallen less than those of men but the gap between the two is nowhere near as large: among employees, female earnings have only fallen by 40 per cent of the fall in male earnings; among the self-employed, the fall in female earnings is equivalent to 81 per cent of the decrease among men."

This report also referenced an ONS survey that found in the self-employment arena, "women are less likely to have a current personal pension than men (20 per cent vs 34 per cent) and the majority of women have never had a personal pension (60 per cent, compared with 46 per cent of men). While self-employed men are more likely to be covered than women, recent decades have seen a particularly steep fall for full-time self-employed men".

The TPAS report's survey consisted of 1,000 participants, and the results showed a large number of women lack much of the knowledge, information and confidence to make decisions about their retirement or be able to talk to those who can.

  • 71% are not confident about making decisions when saving for retirement
  • Nearly half don't know where to go for pension information
  • 26% know how much they will receive in state pension; 36% don't know when state pension will be paid; 57% don't know if there is a shortfall in their NI record; 25% don't know that the age is likely to change again
  • 54% have made no changes to their retirement plans; 27% expect to work for longer; 5% are seeking work or planning to change jobs to save for longer
  • Almost 40% didn't know what their private pension would be, nor how to get estimates
  • 76% didn't think they would be financially comfortable in retirement

Although pensions are very important for both genders, there is an extra urgency for women because of their lifetime earnings - 63% of people earning £7 or under per hour are women. According to the Fawcett Society, this is because jobs traditionally undertaken by women - such as cleaning and caring - are undervalued and receive little pay. Women in the UK do the majority of unpaid care (such as for children and elderly relatives), so need part-time positions to earn money while having time to provide care - 74% of part-time workers are women, and part-time jobs are typically low paid with few prospects for promotion or training.

Of the respondents, only 55% knew where to get information about their pension position and understand what a retirement income is comprised of. This figure is particularly low when we consider that the respondents are likely to be more informed on the topic than the general public.

Currently, women are still more dependent on the state pension than men, for the reasons stated above, therefore changes to it are likely to affect women more than men. Yet there is still a concerning level of uncertainty - only 26% of respondents were aware of what the state pension will provide them. However, as the charts below show, the changes regarding the change to state pension age has been widely received:










Nonetheless, there remains confusion over the details of the change, as well as anger over the changes. The following are quotes from respondents in the report:

"I was born in 1953 so have had 4 changes to my state pension so far. It is outrageous that these small numbers of women have been treated so badly."

"I had no idea it could be changed like that, I thought it was set in stone. I think most of these changes are very unfair particularly for women of my age group."

"I feel that the changes have been forced on women with very short notice to make provisions for retirement."

Change frequently causes discontent, and especially so with something so important and often irreversible as pension planning, so such alarmed reactions are not unusual. That is why it's important to try and take your retirement planning into your own hands as much as possible, so such changes are not disastrous.

Read part two of this blog series, which will look at the concerns women are facing in retirement and how such things as auto-enrolment will affect them.

Call 0800 304 7288 for a friendly chat about your pension

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section:\

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