Women in Britain face a retirement savings shortfall of £113,000 compared to men, with more than a third at risk of poverty in their later years, new research has revealed.
The Scottish Widows Women and Retirement Report found that 36 per cent of women will experience financial hardship during retirement, largely due to employment interruptions throughout their working lives.
The study shows a stark disparity in career patterns between genders, with 58 per cent of women approaching or at retirement age having taken time away from work, whilst only 12 per cent of men reported similar breaks.
The median private pension value for women stands at £173,000 upon retirement, significantly lower than the £286,000 typically accumulated by men, representing a 32 per cent gap that has widened from £100,000 the previous year.
The primary driver of this disparity is childcare responsibilities, with women being twelve times more likely than men to interrupt their careers to raise children - 36 per cent compared to just 3 per cent.
Extended periods away from work carry substantial financial consequences. Nearly a quarter of women have been absent from employment for over five years by the time they reach 55, potentially reducing their retirement funds by £70,000.
The research illustrates this impact through a specific scenario: a woman who takes a five-year break from work at age 35 would accumulate a pension worth £512,000 by age 67.
This represents £69,380 less than a woman who maintains continuous employment, with the shortfall resulting from both the absence of contributions during the break and the subsequent loss of investment growth over time.
Financial preparation for employment breaks remains notably inadequate amongst women, according to the Scottish Widows findings
| GETTYFinancial preparation for employment breaks remains notably inadequate amongst women, according to the Scottish Widows findings. Two-fifths of women failed to make any financial arrangements before stepping away from work, whilst 56 per cent gave no thought to how the interruption might affect their retirement prospects.
The research indicates that whilst women demonstrate marginally better money management than men during employment gaps - 61 per cent compared to 58 per cent - they remain less likely to prepare financially in advance.
The impact on savings capacity proves particularly challenging, with 42 per cent of women reporting that career interruptions diminished their ability to set money aside, compared to 37 per cent of men who experienced similar difficulties.
Planning failures can compound an already significant pension shortfall
| GETTYThese planning failures compound the already significant pension shortfall, creating additional financial pressure for women who have taken time away from their careers.
Susan Hope, Retirement Expert at Scottish Widows, highlighted that "millions of women in the UK are living with the gender pension gap and they don't even know it."
She identified several approaches to address the issue: "We need to improve awareness and take-up of shared parental leave policies. This policy is critical, yet four in five women who had children in the last 10 years didn't take advantage of it."
This represents approximately 2.7 million working mothers
| GETTYThis represents approximately 2.7 million working mothers, with eight per cent reporting unsupportive workplace attitudes from their partner's employer.
Ms Hope also recommended that partners contribute to women's pensions during career interruptions through third party contributions, describing this as "a helpful financial planning tool" that can address contribution gaps whilst earning capacity is reduced.
She noted that "employer contributions in a workplace scheme are often calculated based on their pre-leave salary," providing some protection during maternity leave.