Career breaks creating pension poverty for over a third of women

A new report has revealed that more women are being pushed into pension poverty due to career breaks.

This figure is significantly higher compared to that of men.

Career breaks – men vs women

The research, compiled by Scottish Widows, found that as many as 58% of women either at or near retirement age have taken a career break. This is just 12% for men.

Unsurprisingly, 36% of women are more likely to take a break in their career to raise children compared to 3% of men, which is resulting in a loss of income and pension contribution gaps for many women.

The data shows that by the age of 55, one in four (24%) of women have been out of work for more than five years, which could result in a £70,000 hit when it comes to retiring.

Pension gaps need planning

The Scottish Widows report advises that, if possible, people should try to plan financially for career breaks.

Their research shows that 40% of women didn’t plan financially for their career break, with 56% never considering the impact it would have on their retirement.

As many as 42% of women found that the break in their career reduced their ability to save, compared to 37% of men.

Susan Hope, Retirement Expert at Scottish Widows, recommends improving the awareness and take-up of shared parental leave policies.

She explained, “This policy is critical, yet four in five (80%) women who had children in the last 10 years didn’t take advantage of it. This represents around 2.7 million working mothers, and 8% revealed that their spouse’s workplace was not supportive.

“Separately, spouses should be actively saving into women’s pensions during any career breaks, if possible. This is also known as third-party contributions and, while often overlooked, is a helpful financial planning tool.

“Not only can it maximise tax relief for those who have used up their allowance, this can help to plug gaps in pension contributions while earning power is limited.”

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