There is a significant gap between the pension wealth of men and women. On International Women’s Day, new research has shown that the typical woman in her twenties today will be £100,000 poorer (in pension terms) than her male peers.
The research from insurer Scottish Widows found that women would need to work for an additional 40 years to close this pension wealth gap.
The gender pensions gap is the result of lower average earnings for women, a greater tendency to work part-time, and more time spent with childcare responsibilities.
The research shows that women save an average of £2,200 a year towards retirement during the first 15 years of their careers. Men, on the other hand, save an average of £3,300 a year during the same period.
As men and women get older and their careers progress, the gender pension gap widens due to unequal wage increases. The report says this leads to “significant inequalities in retirement income.”
Jackie Leiper, managing director of pensions at Scottish Widows, said:
“We know that young women have been some of the hardest hit by the short-term financial impact of the pandemic and this has only exacerbated the challenge of reaching pensions parity.
“At the same time, caring responsibilities and high childcare costs are keeping women out of the workforce, lowering their contributions and denting their pension pots.”
In order to reach retirement parity with men, a woman in her twenties today would need to work for an extra 37 years, to accumulate the same pension savings as a man the same age.
However, one approach women could take to close the pension gap with men is to increase pension contributions early in their career by 5%.
Responding to the research, a spokesman from the Department for Work and Pensions said:
“Our groundbreaking pension reforms, including automatic enrolment, have helped millions more women save into a pension, many for the first time.
“Pension participation among eligible women working in the private sector has risen from 40% in 2012, to 86% in 2019.”