Gender Pension Gap

The Gender Pension Gap refers to the sizeable differences in the value of pensions accumulated between of men and women. By 65, the average man has accumulated a pension pot worth £205,800 compared to the average 65-year-old woman’s £69,000. That’s almost 3x the size!

When using your entire pension to purchase an annuity – to guarantee a fixed income for the remainder of your life – if you were a man you would have an annual income of £10,327 compared to £3,396 if you were a woman.

Contributing Factors

The gender pay gap

Unsurprisingly the less you earn the less you can spare for pension contributions.

In 2023-24 the typical man earns 9% more than the typical woman – the closest it has ever been. While this pay is moving in the right direction, at its current rate it would take 29 years before it is completely eradicated.

Childcare

After starting a family, women usually find themselves filling the majority of childcare responsibilities. As a result, over twice as many mothers (37%) than fathers (18%) have quit their job to raise their children.

Without a salary chances are you’re not contributing to a pension. If you’re a full-time mother and your children are over 12 you also won’t receive National Insurance credits, reducing your state pension.

Working pattern

Even when mothers don’t quit their job / employment entirely, they are three times more likely to have to take employment breaks or work part-time.

This has a tangible knock-on effect on career progression – reducing both current and future pension contributions.

How can I improve this

To compensate for the persisting lower income, try to start pension contributions earlier, capitalise on the extra years of compound growth prior to starting a family.

It’s easy to forget about whether you paid into a pension at a previous job, especially if you have changed jobs a few times – however its important to keep track of your pension. As of 2022, £26.6bn are thought to be stagnating in lost pensions. It may be a good idea to combine old pensions to prevent this.

If you’re making career sacrifices you should discuss with your partner how they can help – be it weighted childcare costs, shared parental leave or topping up your pension.

It’s not all doom and gloom. With the gender pay gap steadily decreasing, the gender pension gap should follow suit.

We hope that with more eyes on gender issues the government will be looking to address discrepancies.

If you feel that any of the above has affected your please do not hesitate to contact us on 01903 534587 to organise a free initial meeting to discuss this further.

Disclaimer: A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  Your pension income could also be affected by the interest rates at the time you take your benefits.