Gender pensions gap continues to widen

The research found that despite women contributing a higher proportion of their income to their pension, they will still need to work an additional 14.5 years to attain the same pension savings as their male counterparts.

The gender pension gap has also increased since last year by more than £26,000, highlighting the impact that Covid-19 has had on women’s finances and retirement income, the research showed. 

With men anticipating an annual retirement income of £20,712 and women predicting that their income will be £14,964 in later life, More2Life’s analysis suggested that when life expectancy is taken into account, the gender pensions gap could be as much as £183,936. 

This is despite the fact that women, investing 9.4 per cent of their income, contribute more to their pension pots than men, who invest an average of around 8.3 per cent. 

Taking the average earnings of each gender, the research found that men were able to contribute more to their pension pot in 2020, paying in £3,184, compared with annual contributions of £2,340 for women.

The lender noted that the gap is likely to have increased due to the coronavirus pandemic and its impact not only on the value of pension pots but the ability of over-55s to save into one pension.

The research showed that 30 per cent of women said their financial situation has worsened since the start of the pandemic, hampering their ability to fund or save for later life. This is compared with 24 per cent of men. 

The disparity in the proportion of women negatively impacted by the pandemic could be attributed to women being more likely to work in sectors hardest hit by Covid-19 and therefore more likely to have been made redundant or furloughed. 

Figures from HM Revenue & Customs show that there was consistently a greater number of women furloughed between July and December 2020.

Commenting on the data, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “These figures are concerning and back up our own research showing women are struggling to recover financially in the current environment as a result of redundancy and furlough.”

She continued: “There are things that women can do to plug the gap. It’s not too late to make a difference to your pension value by continuing to contribute after the age of 55. You should also check with your employer to see if they will match any further contributions as this can give your retirement planning a real boost.

“State pension and benefits also form an important part of your retirement income, and so you should check what you are entitled to and whether there are any gaps that need to be filled.”

Dave Harris, chief executive at More2Life, added: “There are a range of products on offer in the later life lending market, including equity release, which has proven to be a popular solution for older homeowners looking to unlock the wealth tied up in their homes to fund their retirement.”