How to plug the pension gender gap
Women are able to build pensions worth less than half those of men by retirement age, research shows.
13th July 2020 14:14
by Faith Glasgow from interactive investor
Women are able to build pensions worth less than half those of men by retirement age, research shows.
Women’s pensions are worth around £100,000 on average by the time they reach retirement age – just 42% of the value of the average pension for men, worth £235,000, according to research based on data from the Office for National Statistics.
The research from financial adviser Fintuity also finds that in order to close that gap, a woman aged 20 needs to contribute an additional £1,300 a year to her pension – that’s more than £100 extra a month.
That figure rises with age, so for someone aged 30 the extra pension contribution needed is £2,000 a year (£167 a month), for a 40 year old it is £2,900 year (£242 a month) and for a woman of 50 it’s a hefty £5,300 a year, or more than £440 extra per month.
Given that in 2019 the average woman aged 30-39 earned £28,990, or £2,416 a month, according to the ONS, finding an extra £167 for pension savings each month is likely to be a big ask for most women. That’s particularly the case during this decade, when they are most likely to be taking time out on maternity leave and working part-time so that they can look after young children.
There are a number of factors contributing to the pensions gap, including the amount of time taken out of work or working part-time for childcare and looking after elderly relatives, the fact that maternity leave can affect pension contributions made through salary, and a tendency to take more locally based lower-paid work to fit in with family commitments.
- Retirement wealth has almost doubled, but gender pensions gap remains bleak
Additionally, auto-enrolment rules require employees to be earning at least £10,000 from a single employer, working against those who take two jobs to make ends meet.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.