Analysis by Scottish Widows to mark International Women’s Day (IWD) on 8 March highlights the gender gap for older women of the ‘Baby Boomer’ generation.

Despite women narrowing the pension contribution gap in recent years by increasing their pension savings the improvement has come too late to make more than a limited impact on pots at retirement.

To save adequately for retirement pension, savers should put away a minimum of 12% of their salaries, says Scottish Widows. The contribution gap between men and women on regular pension savings disappeared for the first time in 2021, the company found.

According to Scottish Widows many women of the so-called ‘baby boomer’ generation took on roles which prevented them building up adequate pension pots. Many were the main carer at home, often taking career breaks to look after young children. Many then returned to work on a part-time basis with women today making up 75% of all part-time workers, often so that they could continue to manage childcare, as well as take on additional caring responsibilities for elderly parents. 

Because of this older women have far less saved than men of the same age, says Scottish Widows which wants changes to help women save more and bridge the gap.

Gender inequality on pensions still exists, too, says the provider. Despite the same proportion of men and women now saving adequately, men still save more than women. The latest Scottish Widows Women and Retirement Report reveals that on average men are putting 16% of their pay aside for retirement, while women save 13.5% of their salary. 

Added to this, women on average earn 35% less than men during their careers, with median salaries of £20,500 compared with £31,400 for men.

The theme of this year’s International Women’s Day is #BreakTheBias and Scottish Widows is calling for a number of changes to overcome “structural inequalities” and help women achieve pension parity. This includes enhancing maternity pensions, equalising shared parental leave rights, addressing the costs of childcare and making it compulsory for pensions to be included in divorce proceedings.

Jackie Leiper, managing director of Workplace Savings, Scottish Widows, said: “Despite the progress that’s been made in recent years by getting more women to save adequately for their retirement, there’s still a mountain to climb to reach true pensions parity. For women in their 60s and 70s, the choices are limited: carry on working or live a more frugal retirement?

“By shining a light on the significant gender pension gap that exists for women of all ages this International Women’s Day, we hope we can accelerate the positive changes we’re seeing so that future generations aren’t counting the cost of gender inequality in retirement.”

Scottish Widows is also reiterating its demand to scrap the auto-enrolment minimum contribution thresholds and is campaigning for the scheme to lower the minimum age from 22 to 18 with default contributions raised, all of which would help close the gender pension gap, it says. A number of leading pension providers have supported similar moves this week.

Scottish Widows is also helping women plan ahead by partnering with Smartpurse, a financial wellness service aimed at women. A range of resources will be available through the partnership, including an online financial health check tool, Money School bite size courses and self-guided programmes.  

The Scottish Widows’ latest Women and Retirement Report can be accessed here.

• The research included questions on pensions and retirement planning and was carried out online by YouGov Plc with 5,059 adults aged 18+. Data was weighted to be representative of the GB population. Fieldwork was carried out between 23 March and 3 April 2021 through a 15-minute online survey. 5,059 interviews were carried out. The sampling criteria were based on four key metrics: age, gender, region and social grade.