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Deficit by a thousand cuts: shocking insights into women's pension life journey revealed in new report

Chartered Insurance Institute

6 min read Partner content

A new report by Insuring Women’s Futures shows women’s financial security is hampered by systemic challenges throughout life.

Women risk financial insecurity in later life due to a culmination of societal, health and financial factors stacked against them, according to a report from Insuring Women’s Futures.
Women today are living longer, are better educated and have greater access to career opportunities, but with earnings forming the basis for pension saving, the gender pay gap is a major contributor to women’s pension deficit. The average pension wealth of women aged 65 is £35,800 – just 1/5th of men the same age, a mere fraction of their financial needs in retirement irrespective of their end of life care costs – on average £132,000 for a 65-year-old woman entering a care home in the UK. 
Despite the employment gap between working mothers and non-mothers being due to close by 2022, women still spend twice as much time caring for children and the home as their partners (36 hours compared with 18 hours). Almost two-thirds of mothers who return to work do so part time and earn on average 30% less per hour than their full-time female colleagues, impacting their and their employer’s contributions into a pension for them over their working life. 
Women are highly achieving academically and yet men’s life-time average earnings are around 80% greater than women’s. With pensions savings based on earnings, these gender differences persist through to retirement and later life. ** 
Women’s greater life expectancy means that a woman’s pension pot typically needs to last longer than a man’s and her care costs are greater; illnesses such as dementia, rising expectations to privately fund care, and lower home ownership means pressure on retirement income is likely to increase. The introduction of Pensions Freedoms, has now introduced additional risks for women’s lower pensions and longer life expectancy, with factors such as investment experience and access to advice contributing to a gender drawdown gap with older women facing a 37% retirement income shortfall compared with men.
Changing family patterns in the UK are also exposing women financially. Married men’s pensions pots are five times married women’s, and yet nearly three quarters of divorcing couples do not discuss pensions. On top of this a quarter of 30-34 year olds now cohabit and one-third of babies are born to cohabiting couples who lack of legal rights on separation – one-third do not realise this – and nearly 4/5ths of millennial women and their partners have not discussed their pensions in detail. The median pension wealth of separated women in the UK is £0.
The Insuring Women’s Futures Market Task Force will take steps to address some of the root causes of the 12 financial ‘Perils and Pitfalls’ that impact women’s financial resilience through life and culminate in an enduring women’s pension deficit, for example: young women’s financial capability; the motherhood penalty and part time working; and improving how the insurance and personal finance profession serves women in their Moments that Matter.
Jane Portas, Insuring Women’s Futures Committee lead on Women's Risks in Life and PwC Partner, comments on the research: “Women in Britain today contribute to our economy and society more than ever before. A young British woman can expect to work until she is 70, do the lion’s share of family caring, and save hard for her retirement. And yet with lower lifelong earnings, she risks facing financial insecurity in later life, and the prospect of not being able to pay for her own care.
“Before long a third of our population, and more women than men, are expected to be in above state pension age. Today, on average married men’s pensions pots are five times’ married women’s, with pensions dependencies between the sexes expected for many years to come. Changes in our work-life patterns, the rise in cohabitation combined and increasingly fragmented family structures means that modernising pensions is a must. Pensions need recognise everyone’s contribution, at home and at work, and to accommodate changes in society, the workplace, our relationships and family life. With women outliving men – and many expected to retire on pension pots a fraction of their average care costs – empowering women to be financially resilient and addressing structural aspects contributing to women’s pension deficit is an economic necessity. We need to come together and act now to improve the long term financial future for all.”
Sian Fisher, CEO of the CII and Chair of the Insuring Women’s Futures committee, said: “Women’s lives and freedoms have changed for the better, yet society’s expectations of women have not. The serious financial disadvantage women face in old age cannot be attributed to any one factor but is a combination of societal, health and financial factors stacked against them. Women are living longer, however, care costs them more at the end of their lives. Women are succeeding in the workplace and the gender pay gap is hopefully closing but caring for family, even for just a few short years, significantly impacts a woman at retirement. It is the culmination of all these factors that is potentially driving women towards to poverty in old age.
“By 2020, 12 million people will be above the State Pension Age and, of these, there will be a million more women than men. Insurance and financial planning have a central role in supporting people to manage their financial risks in life. The findings in this report show there is much to be done to improve women’s pensions and financial resilience generally. In conjunction with our Market Task Force Manifesto, Insuring Women’s Futures calls upon government policymakers, regulators, the legal, insurance and personal finance and wider financial services profession to unite with society to realise positive change to create a sustainable retirement for all.”
Insuring Women’s Futures is an initiative established by the Chartered Insurance Institute (CII) as part of the its ‘Insuring Futures’ programme, bringing together the insurance and personal finance profession to tackle the challenges that women face when it comes to establishing financial stability. The Insuring Women’s Futures Market Task Force is made up of senior leaders from across the insurance and personal finance profession, who are joining forces to improve women’s resilience to risk, as part of the Insuring Women’s Futures programme. 
The report can be downloaded at:


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