Women & Retirement

Lady approaching retirement

Scottish Widows recently published their annual report on women and retirement[1] and it raised some interesting issues. One of the concerns is the impact of divorce on women’s retirement security another is the number of women excluded from automatic enrolment (AE) because they fall below the earnings threshold. These might seem like superficial problems but in reality they represent quite considerable obstacles.

Pensions and divorce
This year’s research by Scottish Widows found that while 42% of marriages end in divorce, the majority of couples didn’t discuss pensions as part of their divorce settlement.  Here’s a few other interesting facts the research uncovered:

One of the key concerns around the issue of divorce is the scale of the imbalance. Scottish Widows found that women lose out on a massive £5bn of pension payments each year[2]. Just 9% of people surveyed said they would want a fair share of pensions. Why is this? Pension Sharing was introduced nearly 20 years ago, but isn’t being used in the majority of cases. Experts suggest this could be a result of the fact that few people are now entitled to legal aid and as a result have to ‘negotiate the minefield of financial issues on divorce’ without even basic legal advice.

Limited impact of auto-enrolment
While AE has been good in raising awareness of pension saving and getting a large number of savers into workplace pensions, there are some significant issues. The first is that even the 2019 contribution levels of around 9% are, on their own, unlikely to result in a comfortable retirement income. The second is that the income threshold excludes many women from being auto-enrolled in the first place. This is in part due to the prevalence of part-time work, childcare and caring responsibilities among women.

What can be done to close the gap?
Scottish Widows makes a number of recommendations for change in this year’s report:

  1. Lower the minimum age for AE from 22-18 – this would give some women an extra four years of saving.

  2. Scrap the minimum earnings threshold for AE – this would make pensions more inclusive for part-time working mothers. But it might also mean that 18 year old newspaper deliverers have to be auto-enrolled!

  3. Make the inclusion of pensions in divorce proceedings compulsory – to ensure women are treated fairly and both parties in divorce understand the legalities of pension sharing.

  4. Maximise the workplace as a key channel – to raise awareness of the retirement savings gap and take steps to address it. Efforts could be targeted especially at workers going on maternity or paternity leave.

To find out more, including how employers can help employees to achieve some financial security in retirement, take a look at our website or contact us.


[1] Women and Retirement Report 2017: Retirement Independence, Scottish Widows

[2] Female divorcees lose £5bn in pension payments every year, Rozi Jones, Financial Reporter, 1 Nov 2017

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