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Women face gender pension gap of around 11%

19 July 2018

Women face a worrying gender pension gap, according to new research from Fidelity.

Young women aged in their late 20s and early 30s are projected to save a pension pot 11% smaller than men by the time they retire, the investment group said.

The report suggested a typical 25 to 34 year old woman’s pension pot would be worth £126,784 by the time she reaches 68. In comparison, men could come to expect £142,836 as a result of earning more and often having more time in which to save.

According to data from the Office for National Statistics, the average man working full time earns an average of £718 per week. By comparison, women earn £578 per week.

And it’s not just earnings that impact the gender pension gap. Women are also found to be less confident about investing and take a more cautious approach than their male counterparts.

Laura Suter, personal finance analyst at AJ Bell, said: “Women face a double whammy. First, they are not saving enough and second, they are not investing that money and so are missing out on higher returns over the long term. This leads to considerably smaller pension pots for women when they come to retire. The third element to this is that women typically live longer than men. This means that women’s pension pots need to last for longer, and pay out more income overall.”

Suter said it would be “dispiriting” for many women to find that they not only receive less during their working life, but also in retirement.

She added: “More than half of the women in the research don’t know where their pension is invested, and many feel safer leaving their money in cash rather than taking more risk and moving into investments. The onus is on the financial industry to make investing more approachable for everyone, particularly women, and to cut through the waffle and baffling jargon to make it easier for everyone to invest their money.”

Meanwhile, research by LifeSight, Willis Towers Watson’s UK DC Master Trust, found 35% of women believe they will continue to work past the age of 70 in comparison to just 29% of men. Yet regardless of this extra measure, only 33% feel confident they have enough resources to live comfortably throughout their retirement years. In contrast, nearly half of men (49%) felt confident about their retirement income.

However, the findings showed that despite the lack of confidence among women, saving for retirement did not feature in their top financial priorities. Instead, their focus is upon the general costs of day to day living (73%), housing costs (60%), general savings (58%) and paying off debt (45%)

Harriet Hayward, client director, LifeSight, commented: “The research highlights an important issue for the pensions industry. Whilst employers need to help their entire workforce understand the benefits of both their workplace pensions and long-term savings more generally, it is clear that companies need to do more to cater for women. The industry can help by offering more tailored, clear communication around women’s specific life paths, helping them to understand the impact of part-time work and career breaks, and the best way to plan and budget when it comes to retirement savings.”