“A lot of work” still needs to be done to address gender pension inequality says Helen Morrissey, pension specialist at Royal London.
Morrissey’s comments came after the publication of the Office for National Statistics (ONS) Wealth and Assets survey in early December, which showed that total private pension wealth soared from £3.6 trillion in April 2016 to March 2018.
However, the survey also revealed a persistent gender gap with men’s pension wealth almost double that of women. Some 56% of men below state pension age are actively saving into a pension, compared with 51% of women. Meanwhile the average male pension pot is £25,300 compared with £20,000 for women.
Morrissey adds: “Scratch below the surface and you will see there is still much work to do to address the yawning chasm of gender inequality with more men continuing to save into a pension and the median amount saved being higher. Many women face unique challenges in saving for their retirement as they spend time out of the workforce caring for children and often only return to work on a part time basis. Industry and government need to look at ways women can navigate these challenges and build a strong foundation for the future.”
UK investment platform, interactive investor also highlights the same gender pensions gap in their survey – the Great British Retirement Survey.
“Scratch below the surface and you will see there is still much work to do to address the yawning chasm of gender inequality with more men continuing to save into a pension and the median amount saved being higher.”
Rebecca O’Keeffe, head of investment, interactive investor, says: “Our Great British Retirement Survey of 10,000 consumers highlighted the desperate need to address the gender pensions gap: while less than a third of men (30%) are confident they will be able to maintain their standard of living when they retire, this compares to even fewer women – just 17%. Men are almost twice as likely to work into retirement for the enjoyment of it than women, and women are more than twice as likely to work into retirement because of financial necessity.”
Gender pension gap starts from birth
Unfortunately, the gender pension gap starts at birth according to new HMRC data obtained through an FOI submitted by Hargreaves Lansdown.
This data reveals that parents and grandparents are more likely to save for their sons than their daughters: 13,000 girls aged 15 or under had money paid into a pension for them in 2016/17 (the latest data), compared to 20,000 boys.
Nathan Long, senior analyst at Hargreaves Lansdown says: “Parents and grandparents are far more likely to save for boys than for girls, so the gender pension gap can start from birth. Whilst women’s paltry pension savings are rightly blamed on the gender pay gap and their greater role in looking after the family, there is another villain in the piece. It’s counter intuitive that there are more pensions for boys as women earn less, take more career breaks, and yet have longer retirements, so need more in their pension.
It’s unclear why this discrepancy exists, although it could be because gifting has come in part from a generation of baby boomers where men are typically more likely to have the lion’s share of pension in retirement.
Saving from a young age can give a huge boost to your pension at retirement, providing the possibility of early retirement which in the future will be all but extinct. It also takes the pressure off people having to save more for their retirement during the early years of their career, when pennies are often tight.”