How the UK Saves: Effects of gender on retirement savings behaviour

Women saving in Nest are three times more likely than men to be under the auto enrolment eligibility threshold of £10,000 per annum

  • Analysis of 8 million Nest members, accounting for a quarter of the UK’s working population, supports the idea that structural factors in the UK labour market, rather than differences in savings behaviours, are at the root cause of the gender pensions gap.
  • While there was no difference in savings behaviour by gender, women saving in Nest are three times more likely than men to be under the auto enrolment eligibility threshold of £10,000 per annum.
  • Men are twice as likely to be in the highest income bracket.
  • Equal numbers of men and women have chosen to make additional contributions to their pension pot.

Today (25th September 2019) Nest Insight and Vanguard have published a supplement to How the UK Saves, focusing on gender differences in retirement savings behaviour. The analysis examines the Nest membership of 8 million savers, who make up a quarter of the UK’s working population, to gain in-depth insights into the root cause of the gender pensions gap.

This latest round of study observed that after controlling for the pattern of contributions as well as earnings, the difference between men’s and women’s pension savings falls away. Equal numbers of men and women were also found to have made additional contributions to their pension pot. This new research indicates that there are no differences in the savings behaviours of men and women, instead structural factors in the UK labour market, such as earnings, gender concentration in certain sectors, and job turnover, are the driving force behind the disparity. Indeed, the analysis also revealed that women saving in Nest are three times more likely than men to be under the auto enrolment eligibility threshold of £10,000 per annum.

Matthew Blakstad, Assistant Director of Nest Insight, comments:

“We need robust research like this to help tackle the challenges facing Nest members and other defined contribution savers. That’s why we set up Nest Insight. We want our research to lead to practical solutions that will help everyone get a good outcome in retirement regardless of gender, job, education, home life or financial situation. Auto enrolment has helped the industry take a huge leap towards that shared goal, but there’s more work to be done. This issue is at the forefront for the pensions industry and policy makers, and we hope that this new evidence will provide useful insights into how we can help close the gender pensions gap.”

Will Allport, Vanguard, comments:

“Our research shows that the “gender pensions gap” is not driven, under the current policy of auto enrolment, by gender differences in retirement saving and investment behaviour, but arises from structural factors within the UK labour market. To address the shortfall of female retirement wealth relative to male, we should refocus our attention on the differences in average earnings and working patterns between genders. Furthermore, lowering the earnings threshold for auto enrolment eligibility, or making contributions on the first pound of earnings rather than adhering to the lower earnings limit, would both help to narrow the disparity between male and female retirement wealth.”

– ENDS –

Notes to editors

View the supplement report here: How the UK Saves: Effects of gender on retirement savings behaviour (PDF)

View How the UK Saves 2018 here: How the UK Saves 2018 (PDF)

For more information, or to arrange an interview, please contact:

Key facts and figures (as at 31st December 2018):

  • Nest members: 8.2 million
  • Gender split: 52% male, 48% female
  • Top 5 industry categories for women: Health and Social Care (20%), Retail, hire and repair (10%), Catering and accommodation (9%), Employment (7%), Education (5%).
  • Top 5 industry categories for men: Retail, hire and repair (10%), Manufacturing (9%), Catering and accommodation (9%), Employment (8%), Construction (7%).
  • For incomes between £10,000 and £14,999, women’s median account balances were 16% higher than men’s.
  • For incomes over £25,000, women’s median account balances were 5% lower.

In October 2019, Nest Insight and Vanguard will be publishing the second edition of How the UK Saves – one of the most extensive studies of retirement savings published in the UK.

About Nest Insight

Nest Insight is a collaborative research unit set up by Nest Corporation to help understand and address the challenges facing Nest members and the new generation of defined contribution (DC) savers. For more information, visit nestinsight.org.uk or email insight@nestcorporation.org.uk

About Vanguard

Vanguard Asset Management, Limited is authorised and regulated in the UK by the Financial Conduct Authority. It is a wholly owned subsidiary of The Vanguard Group Inc., a leading provider of high-value investment services, whose mission is to help clients achieve their goals by being one of the world’s highest value providers of investment products and services. Since establishing the first indexed mutual fund in the U.S. in 1976, The Vanguard Group Inc., has grown into one of the world’s largest and most respected investment management companies.  Globally, Vanguard manages $5.6 trillion on behalf of investors worldwide. (Source: Vanguard, as at June 31st 2019). For more information, visit: vanguard.co.uk

 

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