The fact that women face many challenges when it comes to salaries and pensions has been proven time and time again, but Royal London found that menopause could be one of the issues fuelling women’s retirement gap.
The UK mutual insurer discovered that moving to reduced hours because of menopause could see women miss out on £63,000 in retirement savings. The figure doubles to £126,000 ($146,265, €146,800) if they are forced to stop altogether.
Alongside menopause, the unequal distribution of caring responsibilities and eligibility criteria for auto-enrolment disadvantaging employees in part-time work create a perfect storm for the gender pension gap to widen even further.
Royal London said that, despite it being an event most women will go through in later life, menopause is largely not taken into consideration when discussing retirement savings and planning.
“Menopausal symptoms have forced thousands of women to reduce their hours or worse still, leave work altogether. As a result, these women are missing out on important pension savings at a key stage in their life,” the mutual insurer said.
Case study
Royal London provided a case study to show the extent to which menopause can significantly dent a woman’s retirement pot.
Take into consideration a 50-year-old woman who works full time until state pension age of 67, with a pension fund of £100,000 and who earns £40,000 a month.
With monthly contributions of 10%, 2.5% wage growth and 5% investment growth, she should find herself with a pot worth around £355,510 at retirement if she continues to work full time.
But, if she halves her working hours from age 50, she will find herself with a pension worth £292,356 – a £63,154 drop.
Even worse, if at age 50 she either decides or is forced to stop working altogether, her pot at retirement age will be of £229,202 – £126,308 less than if she had stayed in full-time employment.
Not enough awareness
Clare Moffat, pensions expert at Royal London, said: “While the introduction of automatic enrolment 10 years ago helped more women than ever save into a pension, the UK still faces a yawning gender pension gap.
“Women in their 50s, for a variety of reasons, are much more susceptible to leaving the workforce than men. Separate studies show that caring responsibilities mean women are twice as likely to be forced to leave their job than men.
“However, a notable barrier to remaining in work, which is only just beginning to receive increased awareness, is the menopause.
“While symptoms vary between individuals, for many women the menopause can have a big impact on their everyday life, often resulting in them reducing the hours they work or stopping work altogether.
“It’s only further down the line that the resulting missed pension contributions becomes apparent, but by then it may be too late.”
