Young women need to save an average of £185,000 more during their working life typically to enjoy the same retirement income as men, according to a report.
omen currently aged in their 20s will have only saved around £250,000 on average by the time they retire, according to Scottish Widows.
Men, who typically have higher earnings than women and are less likely to take significant time out of work to raise families, will have closer to £350,000 saved for their retirement on average.
But women are likely to need more than just this savings shortfall, as they tend to live longer than men, and some may spend longer periods needing care in later life, the report argued.
A 25-year-old man today will live to 86 based on current estimates, while a woman can expect to reach the age of 89, according to the Scottish Widows women and retirement report.
There are ways to help level the playing field – from enhancing maternity pensions to offering better parental leave and financial support for childcare – so that women are no longer financially penalised for raising a familyJackie Leiper, Scottish Widows
The £185,000 gap is made up of around £100,000 to bridge the savings gap, another £50,000 to cover longer life expectancy and £35,000 to pay for additional care needs.
Scottish Widows calculated that women would need to save roughly £210 extra per month from their mid-20s until they retire to bridge the £185,000 gap.
However, this calculation was based on several assumptions, including that a pension pot would show yearly real investment growth of 2% and that someone would start saving for their retirement aged 25 and retire at 68.
Jackie Leiper, managing director of workplace savings, Scottish Widows, said: “It’s well known that the gender pay gap has a damaging impact on women’s retirement prospects. But even if we close the saving gap, pension equality would still not be achieved. Women need to fund a longer retirement and shell out more on care costs.
“There are ways to help level the playing field – from enhancing maternity pensions to offering better parental leave and financial support for childcare – so that women are no longer financially penalised for raising a family. Of course, we must also tackle the larger structural issues in our society, like the gender pay gap.”
The report, which has been running annually since 2006, also found that the same proportion of men and women are now saving enough for a comfortable retirement (61%) for the first time on record. People were deemed to be saving adequately if the equivalent of at least 12% of their income was going into their retirement pot.
In 2007, 54% of men were deemed to be saving adequately versus 41% of women.
Ms Leiper added: “We need to build on this positive step forward and now focus on closing the remaining inequities that impact savings. Pension inequality is not just an issue for women to resolve, structural unfairness affects us all and needs the collective efforts of us all to resolve this persistent imbalance.”
The report used a range of figures for its modelling, including Office for National Statistics (ONS) earnings figures and a survey of more than 5,000 people about their retirement planning across Britain.