Now: Pensions’ Gender Pensions Gap Report 2024 highlights the disparity that still exists between men and women’s pensions…
Women to Work an Extra 19 Years
When our sister company, Red Star Wealth, last reviewed this issue in 2022, Now: Pensions had found that women would have to work an extra 18 years in full-time employment to have the same pension upon retirement as a working man.
This has increased, with women now needing to work an additional 19 years in order to build up the same pension pot as the average working man. So, as we can see, this gender disparity in retirement is certainly not an issue that is going away, rather, the gap appears to be widening.
Currently, women retire on average with pension savings of £69,000 compared to £205,000 for men.
“By their late 50s, women have average pension savings worth less than two- thirds of men’s, with a substantial proportion of this difference stemming from inequalities in the labour market, including differing working patterns and the gender pay gap. While there are some pensions policy options that could
be introduced to potentially mitigate the gender pensions gap, it’s unlikely to significantly reduce Without changes in labour market conditions and gendered divisions of domestic labour.” – Lauren Wilkinson, senior policy researcher at the Pensions Policy Institute
Auto Enrolment
Currently, to qualify for auto enrolment, a worker must be 22 years old earning at least £10,000 a year.
As Red Star Wealth outlined in 2022, the removal of the £10,000 auto-enrolment trigger would mean more women would start automatically contributing to a pension fund.
This is still the case, with the 2024 report finding that if the age and earnings restrictions for auto enrolment were removed entirely, an additional 885,000 young women would become eligible. This is approximately 100,000 more than men of the same age.
Currently, 17% of working women don’t qualify for auto-enrolment, compared to just 8% of male employees. This is because women take up more part-time roles than men, and because they are more likely to be in lower-paid roles. One of the main reasons behind this is that women tend to take on the bulk of caring responsibilities…
The Motherhood Penalty
Women are more likely to have varied working patterns over their working lives. More women take career breaks or move to part-time work in order to meet caring responsibilities for children.
For example, in 2021, only 2% of men with dependent children were stay-at-home fathers, compared to 15% of women.
Women are more likely to take on unpaid domestic work and primary carer roles, taking on 26 hours a week on average, compared to the 16 hours seen with men.
This is often referred to as the motherhood penalty, where the impact of having children on lifetime earnings disproportionately affects women more than men. You can read more about the motherhood penalty in Red Star Wealth’s most recent blog.
Pensions and Divorce
70% of couples don’t share their pension pots in retirement.
“If pension wealth is not shared, many women won’t benefit from the sacrifices to their careers and earnings they make for their families. What’s more, research from the University of Bristol and the Nuffield Foundation found more than a third of divorcees don’t know how much their pension savings, or their partner’s pension savings, are worth. So women not only need to understand the value of their and their partner’s pension savings, they also need to know how to get their fair share as part of any divorce settlement.” – Now: Pensions
Movement in the Right Direction
It’s not all doom and gloom – there has been some real positive change over the years, it’s just that more needs to be done! The gender pay gap has decreased by 13% over the last 25 years.
Additionally, the number of full-time employees who are women has increased from 36% in 1997 to 41% in 2022, with the number of part-time male employees rising from 16% to 26%.
What Can You Do?
- Maximise your pension contributions where possible
- Start paying into your pension as soon as possible. You don’t need to wait for auto-enrolment to start saving for retirement. You could talk to a financial adviser about setting up a personal pension instead
- Keep an eye on your pensions pot, checking it regularly so that it’s easier to see if you need to start increasing contributions
- If you take a career break and stop making contributions, try to contribute more when you return to work to help bridge the gap
- Talk to your partner about sharing caring responsibilities equally, so that you both have the opportunity to focus on paid work