Research conducted by NOW: Pensions and PPI has revealed that women are reaching retirement age with the biggest pension savings gap on record.
The findings show that by the time women reach retirement age (65), they will have an average of £69,000 in their pension, £136,800 less than the average man, who will have saved £205,800 in the same period.
Research shows the stark difference in working patterns between men and women throughout their careers. Just 27 per cent of women work mostly full-time throughout their careers, compared to 45 per cent of men.
Women spend an average of 10 years away from the workforce to start families and care for children and relatives, contributing to both the gender pay and pensions gaps by presenting fewer opportunities for career progression and higher salaries.
Over the past two years, working mothers have had to juggle work and caring responsibilities meaning that they are likely to have reduced their working hours or stopped working altogether. Over 5.8 million women are working in part-time roles which means they might not meet the £10,000 eligibility criteria to be automatically enrolled into their workplace pension. In fact, the average earnings for someone working part-time is £6,922.
The spiralling cost of childcare is a hindrance to many working households as the cost of childcare now tops the average cost of a mortgage. Policies aimed at alleviating childcare responsibilities, in terms of both time and stress, could help to improve the labour market inequalities experienced by working mothers.
Speaking about the findings, Joanne Segars, Chair of Trustees at NOW: Pensions said, “It is now a decade since auto-enrolment was launched and it just proves what a powerful tool inertia has been to get over 10 million new savers into auto-enrolment.”
“However, it is by no means a perfect picture as almost the same number of people (10.4 million) are currently ineligible. Women make up the biggest proportion of part-time workers in the UK and with reduced hours comes reduced pay.
“Millions of women have not been able to save via a workplace pension, nor take advantage of their employer contributions and the tax relief.”
“Pension policies and regulations have not kept pace with how many of us now live and work, especially since the Covid-19 pandemic. That is why we have been lobbying the government to fix these inequalities and enable ‘under-pensioned’ groups the same opportunity to build their retirement pot as others enjoy.”
Anna Whitehouse, Author and founder of Flex Appeal, adds, “Flexible working is the number one way that we will close the gender pay gap.
“So, the idea that women are being penalised in later life by the gender pensions gap for working flexibly and therefore being able to work at all is exhausting.”
“If women did not work flexibly and take on caring responsibilities, the economy would crumble. That this additional penalty is falling on women when they are at their most vulnerable is beyond cruel. We need to start supporting women; we need to level the playing field, and we need to start to close these gaps before things get any worse.”
