In July 2019, it was revealed that women save only a third of the amount that men do by the time they approach retirement. According to the report by NOW: Pensions (based on research by the Pensions Policy Institute), women in their 60s expect to have accrued a pension worth £51,100 to retire on, compared with the £156,500 men have saved. These shocking statistics means that half of the UK’s population face an unequal future in retirement:
Source: NOW: Pensions
The key numbers
- On average, women currently earn 18% less than men. This gender pay gap equates to a reduction of pension wealth of 28%.
- However, due to factors such as looking after family and working part-time, there is a 47% reduction in women’s pension wealth when compared to men’s pension wealth by their late 50s.
- By their 60s, the median women’s pension wealth is £51,100, while men’s pension wealth is near £156,500 – a gap of over £100,000.
- 4% of women are now working, but 41% of these are part-time.
- 2 million women (in relationships) with dependent children are currently looking after their family and are therefore missing out on pension contributions. 1.4 million employed mothers with dependent children do not earn above the £10,000 automatic enrolment threshold.
According to NOW: Pensions, women taking time away from work or working part-time, generally to look after family, are the biggest drivers in the gender pensions gap – and have a bigger impact on women’s ability to save than the pay gap. 1.2 million women with dependent children are currently looking after their family, and are therefore missing out on a workplace pension.
The proportion of women working now stands at the highest rate since records began in 1971 – at 71.4%. However, 41% of these women were working part-time during the last quarter of 2018, compared to only 13% of men. The report states that auto-enrolment has ‘done little to address inequality so far’: 1.4 million employed mothers with dependent children do not earn above the £10,000 auto-enrolment threshold.
Women are also living longer (3.7 years longer than men, on average), making it harder for them to build up a comfortable amount of retirement savings. NOW: Pensions suggests that women would need to have saved between around 5-7% more than men by retirement age in order for women to draw the same pension income throughout their retirement.
There was some more positive news, with the report finding that women with pensions are currently more likely than men to have saved in a Defined Benefit (DB) pension arrangement, resulting in a 24% gain in pension wealth by their late 50s. Furthermore, the State Pension Gap has been cut by over 70% with the new State Pension – a positive move towards closing the overall gender pensions gap.
Looking to the future
The NOW: Pensions report is incredibly important in exposing the inequality between men and women’s pensions. The group has suggested a five-point plan for fairer pensions, and, as awareness grows, we hope that steps will be taken to ensure an equal future.
The report has also reinforced the fact that it’s imperative to start saving as soon as possible to help fund a comfortable old age. Women are undeniably at a disadvantage, with several factors making it harder for them to build up a comfortable amount of retirement savings.
It is therefore vital that you take control of your financial future – put simply: a comfortable retirement can only be assured if we take the right steps to save enough money. If you have a question about retirement planning or would like more information about our services, please contact Wellesley Wealth Advisory on 01444 244551 or via email at firstname.lastname@example.org.