Women approaching retirement in the UK have, on average, 66% less private pension wealth than men, the Pensions Policy Institute (PPI) has found.
The median amount for men in their 60s is £157,000 ($196,825, €174,917) compared to just £51,000 for women in the same age range.
The institute also found that there are 50% more women (around 1.2 million) than men who are heading towards retirement without any private pension savings.
“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,” said Laura Suter, personal finance analyst at investment platform AJ Bell.
Working patters
The PPI’s ‘Understanding the gender pension gap’ study revealed that the biggest factor leading to retirement inequality is that women are more likely to take career breaks; either to raise children or care for relatives.
This could impact women’s pension savings up to 47%, it found.
“[AJ Bell’s] research highlighted the impact that working part-time or taking career breaks can have on a woman’s pension pot – with women missing out on £25,500 when they take two year-long career breaks, while those who take the same two-year break and return to work part-time will miss out on more than £100,000 in their pension pot,” Suter added.
The investment platform’s figures are calculated on a woman earning an average UK salary with 5% pension contribution from their employer and 5% from themselves, assuming a 4% yearly investment growth.
Greater support is needed
Between gender pay gap, differing working patterns and greater life expectancy for women, awareness is fundamental, Suter said.
“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.
“For women dealing with low maternity pay and high childcare costs, cancelling pension contributions may seem like a small amount of money in the short term, but the compounding effect of investment returns over the long period until retirement means that the effect of stopping contributions snowballs,” she added.
