One million more women in their 20s could be saving more adequately for retirement if they were able to access emergency cash from their pension, according to a new report published by Scottish Widows.
The latest Women & Retirement report highlighted that the current lack of flexibility in pensions is a barrier to saving, while introducing the ability to access funds for unexpected bills could provide a much needed boost to the nation’s savings.
Scottish Widows found that 40% of women aged 22-29 who have a pension claimed that they do not save as much into it as they would like, as they want ready access to money in case of emergencies. However, just under a quarter (24%) of men in the same age bracket admitted to not contributing as much as they would like to their pension.
Approximately 357,000 women in this age range stated they would begin saving into a pension for the first the time if they were allowed the option to access some of their savings, should they need it.
Scottish Widows is calling on the industry to imbed greater flexibility into pension products by allowing savers penalty free access to some of their pension savings within limits.
The report found that more than two-thirds of women aged 22-29 (67%) are not saving enough for retirement and 25% are not saving anything at all. Whereas men of the same age are better prepared for retirement, with 46% saving adequately and fewer (17%) not saving at all.
Currently the minimum employer pension contribution through auto-enrolment is 8%, while Scottish Widows has suggested a combined 12% employer and employee contribution as an adequate level of saving.
Commenting, Scottish Widows retirement expert Jackie Leiper said: “Building greater flexibility into pension products would help kick-start a new wave of young female savers, while helping boost the amount that those already saving are putting aside. We believe that everyone should have penalty-free access to some of their pension savings, to help break down existing barriers and more closely reflect our lifestyles today and in the future.
“The proportion of women saving adequately has risen steadily over the past few years, with the retirement savings gender gap starting to narrow. While progress is positive, it’s still a slow burner.”
Also commenting, StepChange Debt Charity director of charity development Vikki Brownridge added: “Many women fall in to debt because they simply don’t have the savings or financial resilience to manage life’s income and expenditure shocks, so women can be particularly vulnerable if they face situations like job loss, divorce or large unexpected household bills.
“Having £1,000 in savings can reduce the risk of falling in to problem debt by more than 40%. Giving people access to some of their pensions savings before retirement could help people avoid financial difficulties and encourage people to keep saving for retirement and stay in auto-enrolment.”
Subscribe to our newsletter to receive breaking news by email.