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Notices and Press Releases

Fawcett : gender savings gap even bigger than pay gap

• Women's savings worth a third less than men's
• Divorce is a blip for men's savings, a disaster for women's

Women's savings are worth 33% less than men's (2), according to new research (3) from the Fawcett Society. This gender savings gap is even bigger than the much better documented 17% gender pay gap (4).

Fawcett's research uncovered a worrying picture: women's saving is much more likely to be disrupted than men's by life events such as childbirth or divorce.

Dr Katherine Rake, Director of the Fawcett Society, said:

"Our research has uncovered a worrying black hole in women's savings, particularly for mothers and divorced women.

"This only adds to the ever more compelling case that urgent action is needed to end pay gaps between women and men once and for all."

Key findings

• Young women save at relatively equal levels to young men.
• Divorce is particularly catastrophic for women's savings (5). Our research showed the now widespread idea that women now have the advantage in divorce to be a myth. In fact, men's saving levels recover after divorce, women's don't.
• Mothers are less likely to be saving for themselves than fathers, particularly in the early years of a child's life (6)

Causes of the gender savings gap

It is not that women are less inclined to save than men (7), but

• Women's income is smaller than men's; they save smaller amounts
• Women are more likely put family spending or saving first, men more likely to prioritise personal spending and saving (8)
• There is evidence that some women are relying on partners to save for the future (9).
• Women are much less likely to be able to recover financially from divorce as they are more likely to have given up or scaled back their career during marriage and have even greater caring responsibilities after divorce.

Impact of the savings gap

A women with little savings

• is unprotected when unexpected expenses arise and may have to resort to expensive credit;
• lacks choices, such as whether to leave an abusive relationship
• lacks protection from the anxiety that financial difficulty can cause

What women should do

• Make a Plan B. Relying on a partner to make savings for the future is a high risk strategy, especially if you are not married. For many women saving at all will be impossible. But if you can, save something in your own name.
• If you have a partner, discuss with them what they are saving for themselves and for joint/family needs. Honesty about savings and priorities will help you both plan for all eventualities.

What Government should do

• Provide extra support and encouragement to women to save at key points
• Ensure that those on a low income are able to access free legal advice and representation around divorce and do more to protect cohabiting women on relationship break-up.
• Ensure that women have access to appropriate financial information
• Tackle the income inequality that is a major cause of the gender savings gap

(2) Among those who have some form of savings account, the median total amount held by men is £3000, by women £2000[British Household Panel Survey (BHPS) 2000].
(3) This release is based on a more detailed briefing Saving Lives: Women's lifetime savings patterns. This is available from Jenny Westaway at jenny.westaway@fawcettsociety.org.uk or call 020 7253 2598 or 07939 431 129..
(4) Women working full-time are paid on average 17% less per hour than men working full-time.
(5) Before divorce, around half of women and men save. After divorce, there is a dramatic drop-off; for men this is temporary and after ten years around half are saving again. But for women, after ten years just a third of them are saving. Actual amounts held in saving accounts are much lower for divorced women than men, with 68% of divorced women holding less than £1,500, compared to 51% of divorced men.
(6) One year after the birth of a first child, 42% of fathers are saving regularly compared to 35% of mothers
(7) Overall, women and men are equally likely to have savings, women are slightly less likely to be currently saving (41% of women compared to 44% of men save from current income) and hold much smaller amounts in savings.
(8) In research by Scottish Widows, women and men were asked what they would do with an extra £100. Mothers were more likely to spend or save on children, fathers on themselves. Women and Pensions Report, Scottish Widows, 2005
(9) See, for instance, Financial plans for retirement: women's perspectives (DWP 2005)