10 August 2006 - Bridging the pensions gender gap – Purnell and Munn
We need to change the savings culture to tackle the pensions gender gap, Minister for Pension Reform James Purnell said today.
Today’s state pensions are unequal – with 30% of women retiring on a full state pension, compared to 85% of men. The Government has pledged to tackle that inequality by reforming state pensions to recognise caring contributions.
But the Ministers warned that government action won’t be sufficient to tackle this gender gap. Working women are still saving significantly less than men. Two thirds who have no private pension at all risk becoming dependent upon the state in retirement.
Minister for Women Meg Munn said:
“Women who are not saving could see the independence they currently enjoy replaced with financial dependence on the state in retirement. This is a situation most will not want to find themselves in and must be addressed.”
James Purnell said:
“Half of all women stop saving for retirement when they have children. Our reforms recognise this caring role with a new contributory principle - making the state pension system fairer for women and carers who take time away from employment to raise children or look after others.
“But, most people would expect to have more than just a state pension in retirement. We will make it easier for people to save by introducing a new system of personal accounts. The worrying reality is that if women don’t make their own saving a priority, they could find themselves worse off in retirement than they expect.”
Only 38 per cent of women contribute to a private pension compared to 46 per cent of men. Those that have a private pension contribute significantly less than men – men dominate the groups contributing £200 or more each month, whereas women are more likely to contribute less than £100 per month.
Meg Munn added:
“Women need to think about how they can save privately throughout their lives, in order to close the gender gap and avoid a big drop in income when they retire. The earlier they start saving, the more money they will have to retire on – it's important that women realise that it’s never too late to start making additional provision for retirement."
James Purnell added:
“I want to hear peoples’ views on the barriers they face to saving and where we can do more to help them. You can let me know what you think at http://www.dwp.gov.uk/pensionsreform/forum/”
Changes to the State Pension System proposed in the recent pensions reform White Paper mean that by 2025 90 per cent of women will have a full basic state pension compared to only 30 per cent now.
Notes to Editors
- The Department for Work and Pensions published its White Paper on Pension Reform – Security in Retirement: towards a new pensions system, on 25th May, 2006.
- Copies are available at http://www.dwp.gov.uk/pensionsreform/
- Women and pensions: The evidence was published by DWP November 2005
- It referenced a report from Scottish Widows which looked at the impact of children on women’s work and saving patterns: “Half of all women stop saving for retirement when children enter the equation: among women with children aged 0–5, only 15 per cent are saving for a pension; among women with children aged 6–15, the proportion of women saving rises marginally to 17 per cent. Forty per cent of men with children aged 6–15 are still saving in a pension.”
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