Women in their 60s expect to have accrued a pension worth £51,100 to retire on, amounting to only a third of the value saved by men, at £156,500.
A report out this morning (July 11) showed that in order for women to draw the same pension income as men, they would need to have saved about 5 to 7 per cent more by retirement age.
The report Facing an unequal future – closing the gender pensions gap was compiled by workplace pensions provider Now Pensions based on research conducted by the Pensions Policy Institute with data from the Office for National Statistics.
It stated that working part-time to balance caring responsibilities had the biggest impact on women’s ability to save for their future, resulting in a 47 per cent reduction in women’s pension wealth, when compared to men’s by their late 50s.
This has a bigger impact than the gender pay gap, which cuts women’s pension savings by 28 per cent, it stated. Women currently earn 18 per cent less on average than men.
Despite reaching the record of the highest female employment rate since records began in 1971 – with 71 per cent of women in work – some 41 per cent were in part-time jobs in the last quarter of 2018, which compared with 13 per cent of men.
This means it’s likely these women won’t meet the £10,000 a year threshold in a single job to be auto-enrolled into a pension scheme, as currently set by government.
Now Pensions, which has almost 2m members, is proposing a five-point plan to tackle this discrepancy, which includes the introduction of a family carer’s top up and greater action on the availability and cost of childcare.
Joanne Segars, interim chairwoman of trustees at Now Pensions, said pension saving could be difficult, especially for women.
She said: “Not only are women typically paid less, but they are much more likely to work part-time or take time out of the workforce to care for children or elderly relatives. This time out of the workforce has a huge impact and the part-time pensions penalty can’t afford to be ignored.
“Policy and regulation around saving for retirement need to change to better reflect the changes in the workplace and society.
“Small changes to auto-enrolment could make a big difference for women but to really to bridge the gap more needs to be done to help mums remain in the workforce.”
Another survey from Now Pensions, which polled 1,000 female part-time workers and 250 female homemakers, found three in 10 part-time workers did not believe that their part-time hours would affect their pension pots.
Two in five (41 per cent) of the respondents accepted that they’ll have less saved, while others were combating the shortfall by working longer (18 per cent) or planning to save more in future (11 per cent).
The most common reason (34 per cent) for women working part-time was to allow them to balance work with looking after their children, the number being highest among young women (55 per cent among 18-34-year old and 46 per cent among 35-54-year old).
Laura Suter, personal finance analyst at investment platform AJ Bell, said: “We’ve long known that women’s pension savings are hit by a combination of the gender pay gap, part-time working and the increased burden of childcare costs, but these new figures lay bare the scale of the problem.
“Women face a triple whammy when it comes to their pensions: first, they are not saving enough, second, they are not investing that money and so are missing out on higher returns over the long term, and third, they live longer and so on average need bigger pots than men at retirement.
“Raising awareness of the pension gap is the first step. Employers also have a role to play in highlighting the benefits of maintaining pension payments throughout maternity leave, and offering enhanced pension packages for these women.”
Source – maria.espadinha at Financial Adviser
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