Career breaks push women into pension poverty

The research found that 60 per cent of women in Scotland at or near retirement have taken a career break, compared to 58 per cent of females across the UK, and just 20 per cent of men. Some 38 per cent of women in Scotland have done so to raise children, in contrast to only 3 per cent of men, leading to lost income and pension contribution gaps.

By the age of 55, 41 per cent of women in Scotland have been out of work for more than five years, which could result in a £70,000 hit at retirement. Only 3 per cent of men will be in that situation.

As an example, If a woman takes a five-year career break at 35 years old, she would reach age 67 with a pension worth £512,000. This is £69,380 less than those who do not have a break.

Two fifths of women in Scotland said they did not plan financially for their break and 66 per cent never considered the impact on their retirement. Some 40 per cent found career breaks reduced their ability to save.

This year Scottish Widows has calculated the median total private pension for women at retirement is £173,000 for women and £286,000 for men. That means the gender pension gap is now £113,000, an increase on last year’s £100,000.

Susan Hope, retirement expert at Scottish Widows, said: “Millions of women in the UK are living with the gender pension gap and they don’t even know it. To achieve true equality in retirement, we need to make sure career breaks don’t break women’s future financial security.”

She added that to address gender pensions concerns, awareness and take-up of shared parental leave has to improve and, if possible, spouses should be saving into women’s pensions during any career breaks.