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More than half of UK women expect to run out of money during retirement, yet say the cost of living crisis means they cannot afford to make higher pension contributions, according to a stark new report.
Fidelity International’s sixth annual Women and Money study found that 52 per cent of women did not believe they would have enough money to sustain their income in retirement.
The detailed poll of 2,000 UK adults found that more than one in 10 working women (12 per cent) had reduced their pension contributions in the past year, with those who had done so cutting back by an average of £173 per month.
Just over half (51 per cent) said the lack of funds after covering their essential expenses, such as rent or mortgage, bills and childcare, prevented them from saving more for retirement, while 22 per cent said they were redirecting funds towards other savings goals, such as buying a home.
Fidelity’s six-year long study shows a “persistent and significant” gender pension gap disproportionately affecting women’s retirement prospects.
Its latest report found the average pension pot of a non-retired woman was worth £42,600 — nearly 45 per cent less than the average non-retired man, with a pot worth £76,700.
This gap is particularly pronounced among younger adults aged 18-34, where men’s pension savings are nearly double that of women (an average pot for men of £59,700 compared with £30,400 for women).
Jackie Boylan, head of investor servicing at Fidelity International, said the latest data underlined the stark reality many women face as they navigate a complex financial landscape.
“With so many women feeling concerned that they will not have enough money to sustain their retirement, we must take action to provide better financial education and support systems to help women navigate these challenges,” she said.
“It’s encouraging to see the new chancellor, Rachel Reeves, pledge to address the gender gaps in finance. Closing this gap is a crucial step towards achieving economic equality and requires proactive measures to ensure that all individuals, regardless of gender, can retire with confidence and security.”
Fidelity has launched a Power of Small Amounts online calculator to allow women to model how even small changes could have a significant impact on their final retirement pot.
For example, if a 45-year-old woman earning the average UK salary of £28,765 increased her pension contributions by as little as 1 per cent of her salary, this could increase her retirement pot by £17,000 at age 68. Contributing an extra 5 per cent of salary could secure an additional £85,200 (assuming average annual investment growth of 5 per cent, and not accounting for inflation).
For younger individuals, the impact of small increases could be even greater due to the power of compounding. For a 25-year-old earning the same wage, increasing pension contributions by 1 per cent of salary could lead to an extra £74,000 in retirement. Contributing an extra 5 per cent could boost her pension pot by an additional £370,200.
These amounts could be even greater if employers offer to match additional staff contributions.
“Our data shows that it is never too late or too early to make meaningful changes to pension contributions,” Boylan added. “Even starting later in life, the effect of small, regular increases can significantly enhance financial security in retirement. For younger savers, beginning early and making consistent contributions — no matter how small — can result in a substantial retirement fund.”
