On the go: Women have a gender pension gap in every stage of their career, which reaches 56 per cent at retirement when compared to men, according to analysis from Legal & General.
The pensions provider research, which analysed data of approximately 4m defined contribution scheme members, showed that the average pension pot of a woman at retirement of £10,000 was less than half the value of the average man’s pension pot, which stood at £21,000.
At the beginning of a women’s career, there is already an initial pension gap of 17 per cent, which remains largely unchanged until men and women reach their thirties. It then doubles to 34 per cent by the time they are in their forties and increases further to 51 per cent in their fifties, before reaching the highest level at retirement.
The provider noted that the pension gap remains even in female-dominated industries. For example, in the senior care sector, where 85 per cent of pension scheme members are women, the average woman’s pot size is 47 per cent smaller than the average man’s.
Due to the results, L&G is aiming to conduct annual reviews into whether the gender pensions gap is widening or narrowing. As a first step, the provider will be campaigning to lower the auto-enrolment threshold to those earning less than £10,000 a year, which may help narrow the gap, it said.
In light of the research’s conclusions, Rita-Butler Jones, co-head of DC at Legal & General Investment Management, said: "’The decision to take a career break to raise a family has a clear impact, though there are a number of factors at play here including lower pay relative to male peers at all stages of a woman’s career, a lack of pension contributions when she is away from the workplace, and the potential impact that raising a family has on a woman’s career progression.
"Women are also more likely to face financial struggles following a divorce from their partner and are significantly more likely to waive their rights to a partner’s pension as part of their divorce. This is particularly true for older women, with one in four divorces occurring after the age of 50.’’
Stuart Murphy, LGIM’s co-head of DC, added: "Changing social and workplace attitudes should help begin to level the playing field in terms of responsibilities, helped by the increasing acceptance of more flexible working patterns.
"We need to see increasing support from the state and employers in levelling the playing field by looking at issues such as lowering the eligibility age and raising the minimum contributions for auto-enrolment, as well as addressing the pay gap for part time employees.’’
