Graphic of a man and a woman sitting on money

35% gap between men and women for private pension wealth, data shows

According to the most recent data (2018 to 2020) the Gender Pensions Gap in private pensions stands at 35%.

The Gender Pensions Gap is defined as the percentage difference between female and male non-zero uncrystallised median pension wealth around normal minimum pension age.

The Gender Pensions Gap is smaller among a subgroup of employees who are eligible to be automatically enrolled into their workplace pension scheme. The Gender Pensions Gap stands at 32% among this subgroup.

The size of the gap also varies according to age bands. The gap is smallest for those aged 35-39 (10%) and then increases to 47% for those aged 45-49.

The gap then decreases again in the later years of working life. This pattern is similar to the trajectory of the Gender Pay Gap which shows a relatively small gap until the age of 40 when it approximately triples due to different labour market trajectories of men and women.

Female private pension wealth around NMPA is lower compared to male private pension wealth during the entire observation period. The gap was at a maximum of 42% in 2006-2008 and is currently at 35% at population level and 32% for those eligible to be automatically enrolled.

More on this, the data shows an increase from 1.18 million to 1.36 million female pension savers with uncrystallised private pension wealth around NMPA between 2014/16 and 2016/18.

This increase of 180,000 women compares to an increase of 65,000 equivalent men in the equivalent time frame. When looking at real terms value of pension wealth this shows in the median male pension wealth remaining largely unchanged while median female pension wealth has moved to a female saver with lower pension wealth.

Commenting on the data, Katharine Photiou, Managing Director Workplace Savings, Legal & General Retail, said:

“From looking at our own data among over four million workplace members, we know that the UK has a significant gender pensions gap, even within sectors that are traditionally dominated by female employees. The average woman’s pension pot (£12,000) is less than half that of a man’s (£26,000) at retirement.

There are many reasons for this discrepancy. Women are less likely to hold senior positions and are being paid less, resulting in lower pensions contributions. They are also more likely to work part-time or in multiple jobs that don’t meet the threshold for auto-enrolment, all of which has an impact on their savings. We found many women were taking career breaks without fully understanding the impact they can have on their pension pot and as a result might not be taking steps to address the shortfall.

More support is needed so that women can make informed decisions about their future. But it needs to be personalised to achieve any real shift, and this is where government and industry must work together. For those in midlife, a Midlife MOT can help people think about their work, wealth and wellbeing as a whole before they consider retirement.”

Megan Rimmer, chartered financial planner at Quilter, said:

“Even though women currently earn less than men, this discrepancy over a working life can contribute to a more pronounced difference in pension wealth by the time they approach retirement. For example, for employees eligible for Automatic Enrolment (AE), their gender pension gap is 32%. This is largely due to a larger proportion of men’s earnings qualifying for pension contributions, with women being disproportionately impacted by earnings thresholds and qualifying earnings limits for auto-enrolment.

An encouraging policy step to address the gender pension gap is the government’s recent commitment to rectify issues surrounding parents who have not claimed Child Benefit, thus missing out on the full state pension amount due to unclaimed National Insurance contributions. The government intends to legislate to allow eligible individuals to retrospectively claim National Insurance credit. Such initiatives are essential in advancing towards a more equitable state pension system but the private sector still has a long way to go before it closes the pensions gap.”

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