A new report looks at ways to circumvent the gender pension gap which means women’s private pension pots are likely to be a third less than men’s at retirement age.
Women’s private pension pots in the UK are around a third the size of men’s by the time they approach retirement, according to a new report which highlights ways to counter the gender pension gap.
The report from the Pensions Policy Institute, sponsored by NOW: Pensions, estimates that, by retirement, women will have accrued £51,000, whilst men will have about £157,000 of pension wealth. It calculates that the gender pension pay gap stands at 28%, significantly more than the 18% gender pay gap.
The report adds that there are 50% more women than men heading towards retirement without any private pension savings, meaning they will be totally reliant on the state pension and their partner. It says 1.2 million women [5%] in their 50s are in this position.
This is despite the fact that, as women live longer on average 3.7 years more than men, the report calculates that women would need to have saved around 5% – 7% more than men by retirement age in order to draw the same pension income throughout their retirement.
The reason for the pension gap is linked in part to women’s role as carers, career breaks and more part-time working.
The report says 1.2 million women in relationships with dependent children are currently looking after their family and are missing out on automatic enrolment pension contributions. An additional 1.4 million mothers with dependent children who are employed do not earn above the £10,000 threshold to qualify for automatic enrolment contributions.
The report says a family carer top-up could make up half the pension saving missed by taking time away from paid work to care for children, elderly parents and others. While it would not be enough to match those who do not take time out, the report says it would reduce the gender pensions gap by as much as 28% since it calculates that more women qualify to receive this benefit compared to men (1.5 million women compared to 150,000 men). Younger people who have not yet started families or are in the early stages would benefit more.