Analysis of NOW: Pensions’ 1.7 million members has revealed that the gap is widening between men’s and women’s pension savings.
In 2017, the average man saving with the NOW: Pensions Trust had £424 saved while the average woman had £334, a difference of £90.
In 2018, the gap had grown with men having on average £559 saved versus women who had £433 saved, a difference of £126.
In percentage terms, this means the average woman’s pot has fallen from 78.5% the size of a man’s pot in 2017 to just 77.4%, while women – who make up 43% of NOW: Pensions 1.7 million customers – only own 37% of the fund in monetary value.
By 31st March, employers with 250 or more employees will have to publish their gender pay gap data for the second time as part of a mandatory requirement which came into effect in 2017.
NOW: Pensions’ analysis suggests that for those earning an average salary, in 40 years’ time, pension pots will have grown to £50,514 for men yet just £40,332 for women.* This follows auto enrolment minimum contributions and takes into account mean salaries for men and women over their working lives. If a five-year career break is applied**, this figure falls to £33,986.02 for women – leaving their pension pot 33% less than men.
Amy Mankelow, Director of Communications at NOW: Pensions, said: “The gender pay gap not only affects women’s working lives but leaves them more vulnerable to poverty in retirement.
“Women’s pension savings face a double whammy as women typically earn less and are more likely to work part time and take career breaks to care for children or elderly relatives.
“Auto enrolment does little to address this inequality as millions of women are prevented from saving altogether as they earn less than the £10,000 auto enrolment trigger. This means that a large proportion of part-time workers, who are much more likely to be women, don’t have the opportunity to save in the first place.
“The fact that auto enrolment minimum contributions remove the first £6,136 of earnings from the auto enrolment calculation also hits the savings of more women than men.
“We are calling on the government to remove the £10,000 auto enrolment trigger and get rid of the lower earnings band to give more women the opportunity to save for their retirement.”
According to a report by the Pensions Policy Institute commissioned by NOW: Pensions, over three quarters (77%) of employees earning less than the auto enrolment trigger are women. Over 50% of part-time workers earn less than the auto enrolment trigger and 81% of part-time workers are women.
The report estimates that 3 million individuals would become eligible for auto enrolment if the earnings trigger was removed.
Notes to editors
*Assumes 3% investment growth. Mean salaries from ONS as follows:
|Age Category||Mean Income||Age Category||Mean Income|
|Under 20||15,900||Under 20||15,100|
|75 and over||25,800||75 and over||20,400|
**Career break calculations applied between the ages of 28 and 33 for illustrative purposes.