Women face a stark pension gap, but a good broker can work with their clients to close it, says Amanda Bryden, head of Halifax Intermediaries & Scottish Widows Bank

It’s no secret that women have less money to live on in retirement than men.

On average, we have both smaller pension pots and a longer life expectancy than men, which can be a problem for many when it comes to retirement finances, especially for single women.

But, if women are homeowners, the equity in their property could help fund the lifestyle they want in later life. It’s important this is discussed and considered alongside our wider financial planning.

Brokers are well-placed to offer targeted help and support to women, well before retirement age, and to introduce the possibilities that could be unlocked by equity release.

Mind the pensions gap

According to the Scottish Widows’ latest Women & Retirement Report for 2023, the pension gap is substantial, with many more women (39%) than men unlikely to achieve even a basic lifestyle in retirement, rising to 60% of divorced women.

The cost of living crisis has only exacerbated this problem, making it difficult for many to find the money to put into pension savings.

Many don’t even have a private pension but, of those who do, women are forecast to receive 37% smaller private pension pots at retirement than men (£150,000 compared to £235,000).

That’s problematic in itself and even more so when you consider women have an average life expectancy of 82.6 years compared to 78.6 years for men, according to the latest figures from the Office for National Statistics.

The average woman is on track to receive £12,000 a year in retirement after paying for housing expenses, compared to £19,000 for the average man.

The report also found a specific motherhood penalty, with 75% of single mothers not on track for at least a minimum retirement lifestyle.

Multiple hurdles

Women don’t have smaller pensions because of a lack of desire to provide for our future. Instead, it’s because many face obstacles to saving into a pension pot throughout our life, including:

• The gender pay gap – women earn less throughout their lives and therefore can’t afford to save as much as men –  men earn over 14.3% more each year than women, based on all employees.
• Career gaps – Women are more likely to take gaps in their work, particularly during maternity leave, which can affect career progression and limit earnings, affecting what we can save into a pension.
• Lack of affordable childcare – Women who have difficulty accessing affordable childcare can end up out of the workplace for longer than they’d prefer, sometimes until their children start school.
• Part-time working – There are more women in part-time work too, because childcare or other caring responsibilities stop them from taking full-time employment, which reduces their income and therefore pension pot. In 2023 86% of male employees were in full-time jobs, compared with 61% of females.

What can brokers do to support women?

Women need support to overcome these substantial hurdles to saving into a pension.

If you bring retirement planning into financial discussions early, you’re giving us the time and information to make plans to secure our financial future.

Here’s where to start:

• Speak to women to understand their pension provision and talk to them about securing their financial future.
• If you’re not able to offer pension advice, ensure that women are signposted to a pension specialist who can.
• Remember it’s not just single women you need to be having these conversations with. When talking to couples about their retirement plans, be sure to focus on the plans of women as well as men.
• Discuss equity release early, perhaps years before retirement age, explaining how it can be a potential solution to funding later life.

How equity release can help

If your client is a woman without adequate pension provision but with a significant property asset, it makes sense to raise the possibility of a lifetime mortgage to support them in retirement.

In fact, single women are more likely to take out equity release plans than single men, according to Key’s 2023 Market Monitor. It showed that, last year, 29% of customers were single women and just 16% were single men, while 56% were couples.

Obviously, there are plenty of caveats to discuss with your client and equity release may not be suitable. That’s why discussing alternatives such as downsizing or retirement interest-only mortgages is important too. But raising the possibility of equity release puts it into the mix when your client is planning their later life finances.

Good for business

By ensuring women have the right information and support, we can overcome barriers to planning our future finances. Being able to support women, directly or by referring them to a pension expert, is good practice.

Introducing equity release as an option also ensures that your clients have the information and knowledge they need to make the right decision to fund their retirement.

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