What you need to know about the gender pension gap
The gender private pension gap is closing, but not fast enough.
Last Updated: 1 January 2003
Most of us know about the gender pay gap, but what nobody really talks about is how it impacts your pension.
This article isn't personal advice. If you're not sure if a course of action is right for you, ask for financial advice. All investments can fall as well as rise in value and you may get back less than you have invested. You can’t normally access a pension until age 55 (57 from 2028).
How the gender pay gap can impact your future
If women are paid less over the long term, then it means that women will not only lose out on pay during their working life, but also on any pension contributions during their working career.
This results in a gender pension gap, and not a small one either – more of a gaping chasm. Thankfully, it’s not all doom and gloom.
A recent government report found a few positives such as:
- The gender private pension gap has shrunk by 7% from 2006 to 2020.
- For women between the ages of 35 and 39 the gap is down to 10%. And for people eligible for auto enrolment into a workplace pension, women actually have a higher average pension wealth than their male counterparts.
But that changes for older women. The same report found that for women in their late forties, the pension gap is a staggering 47%. This means we have almost half the savings in our pension pot compared to our male counterparts.
The gender pay gap is one contributing factor to this, but there are other issues at play.
What else influences the gender pension gap?
Women are more likely to spend time out of the workforce caring for children or other family members and during this time they are unlikely to be contributing to their workplace pension. If you’re not working, you’re not earning (except during paid family leave) and you’re missing out on years of pension contributions and investment growth.
Meanwhile, many of us who do go back to work, are far more likely to go back on a part-time basis. This means lower wages, and subsequently lower pension contributions.
For some it may mean not qualifying to be auto enrolled into a pension, as you need to be earning more than £10,000 from one role.
Let’s bridge the gap
There are steps you can take to boost your retirement savings, such as:
- Check to see if your pension is on track – you can use our pension calculator to find out how much you should consider saving for retirement.
- Maximise your pension contributions – add as much as you can afford to your pension and make the most of the tax relief from the government - benefits depend on circumstances.
- Make the most of employer contributions – if you have a workplace pension some employers offer to match your contributions up to a certain limit. If yours does, try to make the most of it.
For more ideas, watch our ‘Supercharge your pension’ webinar with Maike Currie here.
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