The pensions and savings industry must do more to address the stark pensions gap between men and women, says retirement specialist Guiide.
Statistical evidence shows a marked difference between men and women around pensions and retirement planning, with women building smaller pension pots despite a longer life expectancy.
According to Guiide, 82% of its users who built retirement plans last year are male, compared to just 18% of women. Pension pots held by women are also 40% less than those held by men.
Helen Hollister, director of Guiide, says: “Like the earnings gap which can exist in employment between the sexes, there can also be a pensions gap in retirement. This gap should not exist but unfortunately it does. Women are, on average, likely to have significantly less savings than men to put towards retirement. In addition, and to compound matters, women will live around two years longer than men making them likely to need more savings.
“This must be better addressed by the pensions and savings industry to help with engagement and encouraging more female retirement saving where possible.”
For both men and women, taking a career break or reducing hours through part-time work will have an immediate effect on pension savings built up in the workplace. A study by the Office for National Statistics found that in 44% of couples, a man worked full-time and their partner was employed part-time. In contrast, just 3% of couples had a female working full-time and their partner part-time.
While the full state pension can make up a large proportion of retirement income, it is only paid in full if the pensioner has accumulated 35 years of national insurance contributions.
Hollister says: “Most people pay national insurance contributions through work. Given this, most people think of the 35 years in terms of time they are working. If you leave the workforce for good or for a period of time, you will therefore not be paying NI contributions through work.
“There are a number of potential pitfalls around the state pension which, whilst applying to everyone, are statistically more likely to harm the future entitlements of females rather than males. These issues require a clear communication strategy from policymakers to address this as it appears they are not widely known.”
A lack of National Insurance contributions through child benefit is also shown to affect more women than men. Data by HM Revenue & Customs found that by August 2021, a total of 651,000 families had opted out of claiming child benefits, thereby losing their NI credit for the year. Within the families that opted out, 85% of those who were receiving the child benefit payments were registered as female, while just 15% were males.
This means that in cases where NI credit is lost due to opting out, it is overwhelmingly women that may be affecting their state pension.
Caroline Hopper, lead consultant at communications specialist Quietroom, believes pensions need to be reframed in order to encourage more women to engage.
Hopper says: “Research shows many women don’t feel confident enough to make decisions about their investments or pensions so let’s change that. We can use inclusive, positive messaging that guides people through what they need to do and shows that ‘people like you’ do this. That’s proven to make people more likely to engage.
“We also need to go to the places and channels where the women we want to reach are already active. It might mean going to Facebook or Mumsnet, taking those positive messages and conversations to where these people are already engaged.”
