Women face gender gap in pension contributions as well as pay gap
Whilst the pay gap experienced by women in comparison to men is most likely a problem you’ve heard about, another gender gap has emerged which is just as concerning. Recent figures suggest that, on average, women are receiving smaller pension contributions from their employers than men. Between 2013 and 2016, women benefitted from pension contributions at a rate of 7% of their yearly salary, considerably less than the 7.8% received by men.
The gap between men’s and women’s average annual pension contributions also widens as the age bracket increases. Men under 35 received £217 more towards their pension than women of the same age, a figure that increases to £594 for those aged 35 to 44. This then increases again to £1,287 between men and women aged 45 to 54, and again to £1,680 for those between 55 and 64.
Over the four year period examined, the average woman therefore received £2,489 from their employer towards their pension, over £1,000 less than men who received an average of £3,495. Worryingly, if these figures remained constant throughout a typical woman’s working life, this could result in a shortfall of £46,689 compared to the pension typically earned by a man. This figure becomes even more worrying when factoring in the statistic that women on average are still living longer than men, meaning that most women will be faced with making a smaller pension stretch over a longer period of time than many men.
The study, one of the largest ever conducted into workplace savings and taking in over 250,000 pension plans, has revealed three key factors in the significant difference between men’s and women’s pension pots. The first is that women are still more likely than men to opt for a break in their career to raise a family. Secondly, men still typically work in sectors where pension schemes are either more generous or better established. The third is linked back to the issue of the gender pay gap: as women are still earning less than men on average, this leads to employer contributions as a percentage of salary being lower.
The fact that there were significantly more men (154,999) than women (95,262) in the UK-wide study also suggests that a larger number of men are receiving pension contributions at all than women. The Department for Work and Pensions has responded to this figure stating that auto-enrolment will help to redress the balance; but has also conceded that, in light of the study’s findings, more needs to be done to bring pension contributions for women in line with those enjoyed by men.
If this blog has raised any questions why don't we have a quick chat?
MD & Certified Financial Planner
A brief meeting might be of interest, especially if you’re unsure just how wealth management and financial planning could help you.
It would only require the investment of an hour or so of your time, and the coffee’s not bad either.