There is a ‘gap’ between the amount that men and women receive in employer pensions contributions, which if left unaddressed could result in a shortfall of £47,000 by the end of a woman’s working life, according to analysis by a major insurance company.
The inaugural Zurich Workplace Savings Barometer shows that last year, on average, men under the age of 35 received £217 more in employer pension contributions than females of the same age. It adds that between 2013 and 2016 men have benefitted from pension contributions of 7.8% of salary each year from their employers compared with 7.0% for women.
The insurance firm says this difference came on top of the gender pay gap and meant that the value of the employer pension contribution was £3,495 for men and £2,489 for women – a difference of over £1,000 over the four-year period. It calculates that with wage growth taken into account, this difference could amount to a shortfall for women of £46,689 by the end of a working life.
Zurich Insurance says the analysis of over 250,000 pension plans, breaking down by age, gender, employee and member contributions alongside income, is one of the largest ever studies of workplace savings.
It highlights three factors contributing to the shortfall in women’s pension pots: the gender pay gap leads to a lower value of employer contribution as a percentage of salary, the fact women are still more likely to take career breaks to raise a family and that men typically work in sectors with more established, or more generous pension schemes.
Zurich Insurance adds that there were also more men in the UK-wide analysis (154,999 vs. 95,262 women), indicating that, even before the gap in salaries and contributions levels has an effect, there are significantly more men receiving pension contributions in the first place. It says this is likely to be impacted by the auto enrolment eligibility rules which mean that employees earning less than £10,000 per annum from a single job are not automatically enrolled into their workplace scheme.
Meanwhile, research from Citizens Advice finds almost 106,000 working people are not being auto-enrolled into a pension because their earnings come from more than one job, with 70% of them being women.
It says 250,000 have several jobs paying under £10,000 a year- meaning they don’t qualify for auto-enrolment.
However, for two in five of these people the combined income from their jobs exceeds £10,000. Women are particularly likely to be affected, with 72,000 missing out, says Citizens Advice. The charity is calling for the government’s auto-enrolment review – due out this year – to look at how the scheme can be extended to those missing out.