The average woman will receive £47,000 less in her pension pot than a man by the time she retires, claims a new study.
Zurich Insurance Company found that employers are contributing less to women’s pensions than men.
According to the inaugural Zurich Workplace Savings Barometer, last year, on average, men under the age of 35 received £217 more in employer pension contributions than females of the same age.
Further to this, between 2013 and 2016, men have benefited from pension contributions of 7.8 per cent of salary each year from their employers compared with 7 per cent for women.
Zurich lists three factors contributing to the shortfall in women’s pension pots. The gender pay gap leads to a lower value of employer contribution as a percentage of salary, women are still more likely to take career breaks to raise a family, and men typically work in sectors with more established, or more generous pension schemes.
Speaking about the research, Rose St Louis, Zurich Insurance said, “The impact of the gender pay gap on women’s pension pots is no secret, but this difference in the contributions that they receive from their employer presents a serious – and growing – probem.”
“The ‘triple effect’ of smaller salaries, career breaks for women and lower contribution rates needs to be addressed: we can’t ignore a £47,000 shortfall.”
“Workplace engagement and guidance has a central role to play in helping women make the most of their saving potential while they are working full time, but it is now crucial that greater focus is placed on ensuring that this gap is not allowed to grow any further.”
Alongside the new study, Citizens Advice have also revealed research to show that 72,000 women are missing out on being auto-enrolled into a pension.
The research shows that almost 106,000 working people are not being auto-enrolled into a pension because their earnings come from more than one job and 70 per cent of them are women.
To qualify for an auto-enrolment pension, workers have to earn at least £10,000 a year. However, the charity has found that 250,000 have several jobs paying under £10,000 a year, meaning they don’t qualify for auto-enrolment. However, for two in five of these people the combined income from their jobs exceeds £10,000, but under current rules they still don’t get auto-enrolled into a pension.
Citizens Advice is now calling for the government’s auto-enrolment review – due out this year – to look at how the scheme can be extended to those missing out. Under current rules many people who work multiple low-income jobs or who are self-employed are not able to access a workplace pension via auto-enrolment.
Auto-enrolment has already helped over seven million people kick-start a pension and Citizens Advice says the scheme has huge potential to help more people save for a financially secure recruitment.
Gillian Guy, Chief Executive of Citizen Advice said, “Too many people are shut out of a workplace pension – despite earning enough to qualify.”
“Many people – particularly women – work several part time jobs, which helps them manage commitments like childcare or study.”
“But while in many cases they earn over £10,000, and pay tax on this combined income, they don’t have access to a workplace pension and miss out on the opportunity to save for their retirement.”
“The government needs to seize the opportunity of this year’s auto-enrolment progresses and contribution rates increase, changes must be clearly communicated to employers in advance so they can plan for the future of their business.”