Retirement warning as one in three women at risk of poverty in later life

Some 65 per cent of women are on course for a retirement at or below that minimum standard, according to Scottish Widows’ latest Women and Retirement Report, published today.

A third face what the report describes as retirement poverty, with projected income below £13,900 a year for a single person. Just 27 per cent are on track for a comfortable retirement.

Women’s median projected retirement income has risen to £14,500 a year, up £1,500 on the 2025 forecast. However, it remains below the £18,300 projected for men.

The annual gap has narrowed from £6,000 last year to £3,800, helped by smaller pay differences, higher State Pension entitlements and growth in women’s other savings.

Despite that progress, differences in pension saving begin early in working life.

Among women under 30, 14 per cent earn below the £10,000 automatic enrolment threshold, compared with nine per cent of men, analysis of Lloyds Banking Group and Scottish Widows customer data found.

This means some young women could miss out on being automatically enrolled into a workplace pension, along with employer contributions and the chance for their savings to grow over time.

There are also differences among young workers already saving into pensions.

Of 22 to 25-year-olds with a Scottish Widows workplace pension, 71 per cent of women contribute 10 per cent or less of their salary, compared with 64 per cent of men.

Women are also less likely than men to contribute more than 15 per cent across every pay level.

Susan Hope, retirement expert at Scottish Widows, said: “Our data shows that the pension gap takes root from a woman’s very first job. But closing it requires more than better awareness – it means fundamentally changing the systems that shape women’s financial futures.”

Support through changes in work, health and family circumstances is needed to help women keep building their retirement savings, Ms Hope said.

She added: “From pension enrolment and parental leave to support through divorce, menopause and illness, policy and workplace changes must better reflect women’s lives and help them build financial security at every stage.”

Scottish Widows has set out four priorities for government, employers, pension providers and guidance services.

It wants companies to use scheme data to spot savings gaps and help staff maintain contributions through career and life changes.

It is also calling for pensions to be formally addressed during divorce proceedings, with access to specialist support before financial settlements are reached.

The insurer is urging earlier financial education for young people and has launched digital tools designed to boost engagement.

Women aged 18 to 34 who use retirement planning tools are nearly twice as likely to expect to maintain their living standards in later life.

Scottish Widows is also pushing for greater male allyship, encouraging men to share caring responsibilities and plan for retirement jointly with their partners to safeguard women’s pension savings and independence.

Jill Henderson, Retirement Expert at Scottish Widows, said: “The fact that the gender pension gap is at its narrowest point since the National Retirement Forecast began is proof that progress is possible.

“More women than ever are building towards genuine financial resilience in later life.”

But Ms Henderson warned that the pace of change must accelerate. “Too many women still face financial hardship in retirement”, she said, with unpaid caring duties, menopause and relationship breakdowns all disrupting their ability to save.

Ms Hope said: “Closing the gender pension gap is no mean feat, but through collaboration, conversation and digital engagement, we can help future generations of women retire in a better position.”