New research suggests that a monthly payment of just £35 could solve the gender pension gap. According to Fidelity International, women who contribute into a pension in line with the government’s auto-enrolment recommendations may still be left with a pot that’s smaller than their male counterparts.
Predictions from the Office for National Statistics (ONS) indicate that by the time the average 25-34 year old man reaches 68 – the current State Pension age – his pension pot will stand at £142,836. For women, this figure falls to £126,784.
Whilst this means there is a gap of 11%, the analysis from Fidelity International indicates that women could close the gender gap if they dedicated a further 1% of their salary towards their pension at an earlier point in their career.
On a monthly basis, this amounts to an average monthly sum of just £35 over a 39 year period.
However, if action is not taken, the company warned that it could take over 200 years for the gender pay gap to close.
Commenting on the research was Maike Currie. The Investment Director at Fidelity International said: “Financial inequality is one of the greatest challenges we face today. We live longer, earn less and are more likely to take career breaks or work part-time. To unlock the financial power of women, we need to address the personal, professional and policy barriers stopping women from investing.
“On a personal level, women still shy away from risk and prefer the perceived safe haven status of cash. On a professional level, the investment industry needs to do more to build trust and an understanding of their products and services among women. Finally, at a policy level, we need to look at the way pensions are designed and question whether they take account of the unique life choices and challenges women face.”
