The gender pension gap impacts women at every stage of their career, leaving them significantly worse off than men in retirement, says Royal London.
New research from the retirement specialist said that despite near parity in pension participation rates between the sexes, data from its nearly two million customers showed women typically save less for their retirement throughout their working lives. The gap is around 16% in their 30s, rising to 43% by the time they reach age 55. At the point of retirement, women typically only have around £60 saved for every £100 that men have.
Despite the myth that women are less likely to engage with their pension, the research found that there is no gender difference when it comes to the importance placed on pensions as a workplace benefit. On the contrary, women are more likely than men to put pensions at the top of their wish list when applying for a new job.
However, Royal London said one of the biggest drivers behind the pensions gap is the different working patterns between men and women, with women taking on lower-paid part-time jobs to allow them to fulfil caring responsibilities. A total of one million women below age 50 do not work at all due to caring responsibilities.
The findings also highlighted an imbalance between the sexes in matching employer contributions, with more men taking advantage of this (48%) versus women (41%). Affordability was cited as a barrier for half of women, compared to 39% of men who cite this as the reason for not using employer matching.
Clare Moffat, pensions expert at Royal London, said: “Millions more women may now be saving thanks to auto enrolment, but we can’t escape the fact that parenthood and caring responsibilities interrupt women’s working lives. It’s an issue that affects their take home pay, career opportunities and ultimately their pension savings.
“The decisions taken about stepping back from work, or reducing hours to care for children, have such significant implications for the future that it’s worth considering all the options. It’s not that a different decision would be reached, but many women look back and wish they’d known more at the time about the actions they could have taken.”
Moffat said on top of that, women also live longer and therefore have longer retirements, which means they require more money for their retirement than men.
Royal London said the best preparation for the future is for women to start saving as early as possible, map out a retirement plan and regularly review their pension savings to ensure they remain on track to achieve their desired retirement lifestyle.
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