Pensions gender pay gap reaches 40 per cent

From November 6 2018, for the first time in more than 70 years, women and men will receive their state pension from the same age, which will be 65 for those reaching that age between November 6 2018 and December 5 2018, and then will gradually begin to increase, first to age 66 and then to age 67.

But while gender parity may have been achieved in theory, retirement outcomes remain unequal. Research from the trade union Prospect quoted in the Financial Times on Wednesday suggests the gap between men and women’s pension income is more than twice that of the gender pay gap.

The study, which examined the 2016-17 Department for Work and Pensions family resources survey, considered all retirement income sources, including state, personal and workplace pensions.

It’s shocking that 100 years after women secured the vote, we have a gender pay gap across every occupation

Kate Smith, Aegon

It concluded that pension income for female retirees was 39.5 per cent lower than for men that year, or around £7,000. “These figures reveal the shocking scale of the gender pension gap and clearly demonstrate the need for urgent action to address this issue,” Sue Ferns, deputy general secretary of union Prospect, told the Financial Times.

Women are more likely than men to miss out on auto-enrolment contributions paid by employers into a workplace pension scheme because they typically earn less. Those earning less than £10,000 will not be auto-enrolled at all.

Women also lose out on contributions if they take time out of work to care for children.

Commenting on the disparity, Kate Smith, head of pensions at Aegon, said: “It’s shocking that 100 years after women secured the vote, we have a gender pay gap across every occupation. The fact that the pay gap filters down to mean [that] women receive lower pension incomes is a double blow.

“When you factor in that women’s ability to save is further interrupted by breaks in their career to raise a family or care for elderly parents, the pension gap reaches epic proportions, making it difficult to catch up."

Aegon research shows that by the time women reach age 50, they have on average only half the pension savings (£56,000) of their male counterparts, who will have saved on average £112,000.

Women are more likely to bury their head in the sand when it comes to knowing how much they hold in a pension, with one in three women unsure of the exact amount saved, compared with just one in five men.

Women are more likely than men to have no pension arrangements in place at all, with 15 per cent of women compared with 11 per cent of men failing to pay into a pension plan of any kind.

When it comes to saving enough for retirement, significantly more men (15 per cent) than women (4 per cent) have saved more than £300,000 in pension savings – the amount that someone on average earnings would need to maintain their current lifestyle in retirement.