Analysis from interactive investor has found that women face a gender pension gap starting in their 20s and persisting all the way through to retirement, leaving them with nearly half of the value of male pension pots.
Interactive investor said the gap first appears between the ages of 25 and 34, when women typically have 9% less in their pensions compared to men, and coincides with the age that many women become first time mothers. By age 55, women had 46% less than men. In contrast, becoming a father does not appear to slow down the growth rate in pension values among men.
The data showed that just 0.74% of female interactive investors’ customers have a SIPP worth more than £1 million, compared with 2.78% of male customers.
Becky O’Connor, head of pensions and savings at Interactive Investors, said: “The gender pension gap could be renamed the mothers’ pension gap. Evidence from interactive investor pension customers shows the gender pension gap doesn’t exist until the mid to late twenties age group. It’s no coincidence that this is the time that women tend to have their first child.
“The gap then becomes a chasm through the thirties age bracket and never recovers, with the growth in men’s pensions consistently outpacing the growth in the value of women’s pots.
“Women typically have just over half the pension pot value of men by the time they reach their mid-fifties – the point at which it becomes possible to access pension savings for the first time.”
O’Connor said the sharp gap in pension values means the Lifetime Allowance limit of £1.073 million is much more likely to affect male investors.
O’Connor added: “Women contribute less to pensions when they take time out of work to have children. It tends to be mothers rather than fathers whose pay and pensions are affected by having children because maternity leave pay is generally more generous than paternity leave pay.
“Once a woman has taken time out of work and pension contributions, the damage is done and it can be hard to reverse. What is more likely to happen is that the pattern repeats. When it comes to subsequent children, it then makes sense again for the mother to take more time out, compounding the problem.”
O’Connor said equalising maternity and paternity pay would help address the issue by giving couples more choice in how they organise working and childcare responsibilities in the early years.
