‘Women heading for poverty in later life’

The IWF has found that the average woman is outperforming the average man in education and now earns as much as men in her twenties.

However a significant pay gap opens from her early thirties, and by her fifties, she typically earns 16 per cent less than a man of the same age and is more likely to be in insecure employment, IWF says.

Her 30s are typically spent caring for children, alongside part-time or temporary work, and in her 40s and 50s she may also be caring for an adult.

The pay gap coupled with loss of earnings through unpaid care, has a huge impact on her ability to save and bounce back from hardship or plan for her financial future. And we have yet to consider relationship breakdown, a risk in her late 30s, 40s and 50s in particular, which has profound effects on her future wellbeing.

The IWF illustrates this lack of saving ability in relation to pensions.

The average man accumulates five times the pension pot of the average woman by the age of 69, with a man having £179,091 and a woman of the same age having just £35,800. For divorced women the situation is considerably more precarious, with average pension pots worth a mere £9,019 compared with £30,341 for divorced men.

The report found that any decisions around retirement saving are made as a household, and women in long-term relationships may expect to share their partners’ pension wealth.

But the research shows these patterns of pension wealth leave women vulnerable in the event of a relationship breakdown and mean that women are more likely to rely on a partner or the state for their income in old age (48 per cent of divorced women compared to 38 per cent divorced men).

Life expectancy is increasing and a girl born today can now expect to live until 83 and a boy can expect to live until he is 79. But women typically have more years in ill-health at the end of their lives (19 years on average, compared to 16 years for men), and need professional care for twice as long as their male counterparts. The average cost of women entering a care home from 65 to 74 is £132,000 - nearly double the cost of men’s.

Insuring Women’s Futures has produced this report to highlight the gap between men’s and women’s exposure to risk and resilience to shocks. It is setting up an industry task force to address this issue bringing together the insurance profession and other sectors and bodies, including the Government, to consider solutions to tackle this.

Sian Fisher, CEO of the CII and Chair of the IWF committee, said: “Women today are left disproportionately exposed to risks that society is not overtly recognising. This is at the same time as historic support systems are receding. We are moving from a dependence culture to one of independence, where we will have to be less reliant on our partners, families, communities and the state, and must take charge of our own financial welfare. Yet today’s women are simply unprepared for the risks that they will face in life.

“This is not just a ‘women’s issue’, it is a wider risk for society because if we don’t address it now, we will face a huge burden of care that we will not be able to sustain.”

Jane Portas, IWF Committee lead on Women’s Risks in Life and PwC Partner, said: “This study presents a snapshot of the risks faced by women and girls in Britain today. It shows us that while women are increasingly better educated, they earn less, feel less financially secure, provide the bulk of unpaid care, have smaller pensions, and face greater hardship in life and struggle to pay for their own care. But it’s not just about women and girls, the study shines a spotlight on wider society and men’s and boys’ risk exposure too.

“I encourage men and women, both in the insurance and financial planning profession, other bodies, and society at large, to study these findings and play a role in shaping our approach to risk in the future.”

Baroness Ros Altmann, former Pensions Minister, said: “As consumers we all have a lot of risks to worry about. It’s easy to become disengaged; simply from feeling there are too many competing risks. Should I worry about paying into a pension, getting a mortgage or paying off my debts? Studies like this help to clarify those priorities, helping us all to decide how we can take charge and engage in managing our personal and family risk.”