Every year International Women’s Day highlights the importance of gender equality throughout our society. But as in so many areas of life, our unfair pensions system shows there is still a long way to go.
New research from NOW:Pensions and the Pension Policy Institute shows that, on average, women in retirement have 55% lower pension income than men.
The average annual private pension income for men aged 65 and over is £8,620, while for women it’s £3,920 – a gap of £4,700. This is despite a record number of women being in employment (72.4%).
Unfortunately, there is no escaping the reality that the pension system in the UK is weighted heavily against women, and that half of the population face an unequal future in retirement.
It starts with unequal pay
There are many reasons why the pension system isn’t fair, the primary one of course being that pay before retirement isn’t fair to start with.
Thanks to the introduction of Gender Pay Gap reporting, we know that women earn significantly less than men, mainly because they are working in lower paid roles.
The most recent figures (April 2019) show that the median hourly pay for women is 17.3% less than for men. If we break this number down further, we can see that while the full-time pay gap is 8.9%, for part-time workers this gap is actually in favour of women by 3.1%.
This shouldn’t come as too much of a surprise. Women are more likely to work part-time while caring for children or elderly relatives. They are also more likely to interrupt their careers, and therefore their pensions contributions, than men, and to work in lower-paid roles.
Pensions Policies aren’t working for women
There have been many attempts by the Government to encourage pensions saving, but none have been able to close the gender gap.
Even auto-enrolment, by far the most successful of these initiatives, has had limited impact since it only starts when someone earns £10,000. Many women, especially those in part-time roles or second jobs, don’t earn enough to reach this threshold and are therefore locked out of the system. This barrier should be removed to enable more women on low-incomes to start saving for their retirement.
“There is no escaping the reality that the pension system in the UK is weighted heavily against women.“
Take control, and do it now!
Like every other issue raised by International Women’s Day, there are no easy solutions to pensions inequality.
But one thing is clear. A heightened awareness of pensions is the best way to make sure this gap narrows.
Everyone, men and women alike, must take action now to manage their savings and ensure their retirement is as comfortable and enjoyable as possible.