Women’s retirement outlook is the strongest since the National Retirement Forecast began three years ago, yet many are still at risk of falling short, according to Scottish Widows’ latest Women and Retirement Report, published today.
Women’s median projected retirement income has risen to £14,500 a year, up £1,500 on 2025 projections. While this remains below men’s £18,300, the increase marks encouraging progress towards greater gender equality in retirement.
The disparity between men’s and women’s projected annual retirement income has also narrowed from £6,000 in 2025 to £3,800 today. This reflects narrowing gender pay differences, higher State Pension entitlement and growth in women’s other savings.
Women’s retirement prospects remain mixed. Just over a quarter (27%) are on track for a comfortable retirement. While a third (33%) risk retirement poverty, which equates to less than £13,900 a year for a single person or £22,500 for a two-person household*.
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.
“Change must happen faster. Too many women face a retirement of financial hardship, with life events such as unpaid caring responsibilities, menopause and relationship breakdowns disrupting their ability to save. Understanding how long-term savings are tracking is essential to helping women stay financially secure.”
Young women are disadvantaged from early in their careers
Analysis of Lloyds Banking Group and Scottish Widows’ own customer data reveals that young women face disadvantages early in their careers:
One in seven (14%) women under 30 earn below the £10,000 automatic enrolment threshold, compared with 9% of men, potentially missing out on employer contributions and valuable early investment growth.Among 22-25-year-olds with a Scottish Widows workplace pension, 71% of women contribute 10% or less of their pay, compared with 64% of men. Women are also less likely than men to contribute over 15% across every pay band.
Digital tools hold key to unlocking engagement
Digital tools can help younger women understand pensions, navigate decisions and start saving early. Women aged 18-34 who find retirement tools helpful are almost twice as likely to expect to maintain their standard of living in retirement as those who use none (38% vs 19%).
Scottish Widows has developed a suite of digital content for its app and website specifically designed to help young audiences navigate the sometimes complex and confusing world of financial products. Its latest digital game – released today – is ‘Chart Your Own Future’, which assigns players a persona based on their responses to questions and helps them understand their options.
Susan Hope, Retirement Expert at Scottish Widows, added: “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.
“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.
“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.”
Scottish Widows’ four priorities for government, employers, pension providers and guidance services to protect women’s pension savings:
Identify pension gaps early and protect saving when work changes: Employers should use their scheme data to identify gaps and help staff maintain savings through key life and career changes.
Make pensions part of divorce process: Ensuring access to pension information and specialist support before financial settlements, formal or informal.
Build financial resilience and pension understanding early: Improve young people’s pension knowledge and encourage early saving.
Encourage male allyship: Share caring responsibilities and plan retirement jointly to protect women’s pension savings and independence.
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