The gender pension gap widens substantially from the age of 35, with women significantly lagging men by the time they reach their 50s, but nearly 20% of employers are unaware of the issue, research from Aviva has shown.
Based on the workplace pension data of just over 5 million pension plans, the gap between men and women’s pension contributions for 35-39 year olds is 21%, up from an 18% gap last year. This figure increases to 24% among 40-44 year olds and 27% for 45-49 year olds before reaching a gap of 32% for those aged between 50 and 54.
The new data found that women aged 60-65 years old had pension pots which are on average just over half (57%) the size of men’s pots at the same age.
Michele Golunska, managing director for wealth and advice at Aviva, said: “This suggests a clear line in the sand around the age that women are often making milestone career and childcare decisions and considering opting to work part-time. Pension contributions are unlikely to be a deciding factor when considering whether to work part-time, but what is important is that the long-term impact on a pension is understood when making that decision. This is crucial to good financial planning.
“Some might consider upping their pension contributions, but this would have to be carefully balanced against disposable income. An option that some parents may consider is sharing the caring responsibilities to help spread the long-term impact on pension savings.”
A previous report by Aviva, published in June last year, found that women are significantly more likely to say that their workplace pension will not provide enough for them to have a comfortable retirement, with part-time workers more likely to say that they will not be able to retire comfortably on their workplace pension than full-time employees.
The report also found that almost a fifth (19%) of employers had never heard of the gender pension gap and just over two in five (41%) acknowledged they have a gender pension gap.
Golunska continued: “There are widely varying ways in which the gender pension gap is measured, using a host of figures which reflect household surveys of pensioners, average pension pots, contribution rates, and pension incomes. This inconsistency is a barrier to assessing progress. We would like to see the government find a suitable definition of the gender pension gap alongside a metric for measuring progress on reducing the gap.”
Aviva has urged government to remove the auto-enrolment lower qualifying earnings threshold, currently set at £6,240 per year, enabling women in a pension scheme to receive an employer pension contribution from the first pound they earn.
Golunska added: “We would like the government to put a ‘roadmap’ in place now outlining how and when it will implement changes to AE. Now, in the middle of a cost-of-living crisis, is not the time for radical change. By providing a clear ‘roadmap’ for changes to AE, government will give employers and pension savers time to plan, which will help to ensure better retirements.”
Aviva also urged part-time workers enrolled into a workplace pension scheme to consider increasing their monthly contributions.
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