£114 gap in women’s pension contributions a month and £169 gap for middle-aged
interactive investor’s Alice Guy crunches the numbers on the gender pension gap.
3rd October 2023 14:25
by Alice Guy from interactive investor
Interactive investor research, based on a survey of 2,000 adults by Opinium for interactive investor, shows the gaping chasm opening up between men and women’s pension savings and also shows that pension savings drop off in mid-life, with middle-aged pension savers paying in a worrying 45% less than younger pension savers on average.
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Key stats
- Women pay £57 less into their pension on average than men each month, a massive 28% less on average
- Total pension contributions for women, including employer contributions are an huge £114 less on average each month than for men
- Pension savers in mid-life aged 35-54 pay £75 less into their pension each month than younger pension savers aged 18-34
- Middle-aged pension savers contribute £169 less into their pension each month on average than younger pension savers, including employee and employer pension contributions.
The data is based on pension savers with a defined contribution pension and excludes pension savers with a defined benefit/final salary pension.
The findings follow the publication of interactive investor’s Show Me My Money 2023 pension report, which focuses on pension blind spots among people whose main pension pots are in defined contribution schemes.
Pension contributions | ||||
Employee contributions | 18-34 | 35-54 | Men | Women |
Don't know | 17% | 19% | 15% | 22% |
Nothing | 5% | 17% | 25% | 25% |
Less than £100 | 24% | 25% | 21% | 22% |
£101 - £250 | 26% | 20% | 18% | 19% |
£251 - £500 | 16% | 10% | 11% | 8% |
Over £500 | 13% | 8% | 11% | 4% |
Average monthly contribution | £262 | £188 | £200 | £144 |
Difference in employee contributions | -£75 | -£57 | ||
Employer contributions | 18-34 | 35-54 | Men | Women |
Don't know | 26% | 27% | 20% | 32% |
Nothing | 4% | 20% | 26% | 25% |
Less than £100 | 21% | 23% | 17% | 20% |
£101 - £250 | 19% | 13% | 13% | 12% |
£251 - £500 | 16% | 9% | 13% | 6% |
Over £500 | 14% | 8% | 10% | 6% |
Average monthly contribution | £284 | £190 | £205 | £147 |
Average total monthly contribution including employer | £547 | £378 | £405 | £291 |
Difference to total contributions, including employer and employee | -£169 | -£114 | ||
Source: Research conducted by Opinium among 2,000 UK adults, data relates to pension savers with defined contribution pensions and excludes those with defined benefit pensions. Figures are rounded and may not add up to 100%
Pension contributions as a % of salary | ||||
Employee contributions | 18-34 | 35-54 | Men | Women |
Don't know | 18% | 28% | 19% | 27% |
Nothing | 6% | 17% | 25% | 26% |
1% - 5% | 21% | 19% | 16% | 17% |
6% - 10% | 16% | 21% | 15% | 15% |
11 - 15% | 14% | 4% | 9% | 5% |
16 - 25% | 16% | 5% | 10% | 6% |
Over 25% | 7% | 6% | 6% | 4% |
Average monthly contribution | 12% | 9% | 9% | 7% |
Employer contributions | 18-34 | 35-54 | Men | Women |
Don't know | 23% | 29% | 21% | 30% |
Nothing | 4% | 19% | 26% | 25% |
1% - 5% | 19% | 19% | 14% | 17% |
6% - 10% | 16% | 15% | 14% | 12% |
11 - 15% | 10% | 6% | 9% | 5% |
16 - 25% | 14% | 5% | 8% | 6% |
Over 25% | 13% | 8% | 10% | 5% |
Average monthly contribution | 14% | 9% | 10% | 8% |
Sources: as above | ||||
Alice Guy, Head of Pension and Savings, interactive investor says: “The figures reveal a stark divide between the pension haves and the have-nots, with nearly half of both women and men contributing less than £100 each month to their pension. At the higher end of pension contributions, men are doing better than women, with over one-fifth of men contributing more than £250 to their pension each month, compared with only one in eight women.
“Overall, there is a huge gulf between men and women’s pension contributions, which makes it much more difficult for women to achieve a comfortable retirement in the long run. Women’s pension contributions often start to drop off in mid-life if they take time out of the workplace or reduce their hours to fit around childcare or other caring responsibilities. The findings echo DWP research, which shows that women have a 35% pension gap, compared to men once they reach 55, the minimum age they can start drawing their pension.
“It’s often a double whammy for women as lower wages combine with increased costs to make it harder to keep up with pension contributions. It’s important for women to try to keep their pension contributions going in mid-life, particularly if they reduce their hours, as even small amounts can add up to a decent retirement income, especially with an additional boost from pension tax relief and employers’ contributions.
“It’s also worrying to see how much pension saving drops off in mid-life, with around one-fifth of middle-aged pension savers contributing nothing to their pension. We often assume that people will max out their pension savings once they hit middle age and have a few pay rises under their belt, but that isn’t borne out by our research. In fact, people struggle to maintain pension savings at a high rate as the pressures of life kick in during middle age, with less than one in five middle-aged workers contributing more than £250 each month.
“The findings illustrate the importance of starting young with pension contributions, as you never know what’s coming round the corner. Pension savings made in your 20s and 30s are worth even more than those made later in life as they have time to grow with the magic of investment compounding.
“The good news is that our research also suggests that many employers are contributing a lot more than the minimum amount of 3% of pay to their employees’ pension, with many employers contributing more than 10% and around one in three employers contributing more than £250 each month for younger pension savers.
“When you’re planning to move jobs, it pays to check your future employer’s pension contributions as they vary significantly between employers. Just a few extra percentage points could make a huge difference to your pension wealth in retirement and get you one step closer to the retirement you want.”
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