Women face savings time bomb

Half of all single mothers have no nest egg and less than one in five women will get a full basic state pension

Millions of women face a bleak future because they are not putting away enough money to allow them to live comfortably in later life.

The Fawcett Society, which campaigns for equal rights for women, is warning that the savings gap between men and women is now for the first time greater than the difference in their salaries.

Tomorrow, the charity will launch an inquiry into this "assets time bomb", which, it says, most seriously affects divorcées, single mothers and unmarried women who live with their partners.

Its initial findings have revealed a huge difference between men and women in their ability to save and invest in pensions. Women put away at least £50 less than men every month. Only 17 per cent qualify for a full basic state pension, compared with three-quarters of men; more than half of single mothers have no savings at all, and women are more likely to be in debt than men.

Women's attitudes also differ from men's in that they often have small amounts of savings that they keep as secret rainy day money for emergencies, instead of more effective ways of investing, such as ISAs or pensions.

Katherine Rake, director of the Fawcett Society, said that policymakers had distorted the true scale of the problem by focusing on only a small percentage of the female population when reporting an increase in women's wealth. She said that many women were forced to stay in unhappy relationships because they did not have any personal savings.

"There is a lot of attention on the pay gap but there is a much bigger problem over savings, with cohabiting women who separate, divorcées and single mothers particularly at risk," said Dr Rake.

"Women who divorce, for example, do not always get a full and equal share of assets. But the proportion of women who say they are going to rely on their partners is scarily high."

The case of Deirdre Smith illustrates how women often fall into the trap of believing that they can expect to receive a share of their husband's pension when they retire.

The 57-year-old gave up a job with the Inland Revenue to bring up her two children. But when she and her husband, a headteacher, divorced after 20 years of marriage, she was not awarded a share of his pension. She has since had to return to work part-time.

"After my divorce, my pension prospects took a dive," said Mrs Smith, from Derby. "I am now contributing to a final salary pension scheme, but I am not going to have a massive settlement when I retire." Her boss refused at first to contribute towards her pension because she was a part-time worker.

Financial experts warn that even women in happy relationships need to look at their finances. "Where the male partner is the main earner, women tend not to bother about sorting out their own financial interests," said Adele Jones, a financial adviser and director of the Paramount Group.

"A lot of women take it for granted that the man has sorted everything out for them, but very often that is not the case and they can come unstuck."

Additional reporting by Jonathan Owen and Jonathan Browning

The Optimist: 'I just enjoy spending my money'

Sally Jarvis is more concerned about how to spend her earnings than she is about saving. The 25-year-old, who edits educational material for schools, says she is no different from most of her friends and is right to focus on paying off her mortgage rather than setting up a pension.

"I wouldn't know where to start thinking about a pension plan - the company I work for is so small, I have never been approached to start a pension," says Ms Jarvis, from St Ives in Cambridgeshire. "I'm just enjoying spending my money too much."

But leaving financial planning to any future husband is not an option for the graduate, who has a student loan to pay back. "Marriage is not for life these days, so I would never rely on my husband. You have to live for yourself."

She has no knowledge of pension schemes and finds the whole idea overwhelming, but is planning to seek advice from friends and family.

"I realise that it is perhaps something I should think about now. Otherwise I could be left high and dry by the time I'm 60."

Lauren Veevers

The Pessimist: 'We have a buy now, think later attitude'

After giving up teaching in 1996, Josie Pearson took a substantial pay cut to begin a career in public relations. The money she gets from her pension from four years of teaching will be worth very little when she retires.

Instead, the 37-year-old from Hampshire will be relying on her partner, who works for the Ministry of Defence and has a good pension plan, to keep her secure in old age.

That she is unmarried, and so has no claim on her boyfriend's pension if they split, is a concern, although they do have a joint mortgage and endowment policy that will pay out in 20 years.

She says: "It does worry me that I might be left in a potential financial mess, but I own half of everything else, so I wouldn't be left with nothing."

Nevertheless, a pension and savings would be more important to Ms Pearson if she had children. "My sisters have started saving for their children's education - it is more important for them to think about the future."

In her view, women's "buy now, think later" attitude towards spending is one reason why they have more outgoings than men.

Lauren Veevers