New figures have shown the extent of the problem for women in retirement years
Women are reaching the age of 55 with approximately a third less in their private pensions than men, according to the latest official figures.
A report compiled by the Department for Work and Pensions (DWP) has, for the first time, revealed the true extent of the difference between men and women when it comes to retirement and potential outcomes.
- SEE MORE What is the gender housing gap?
- SEE MORE How to find and add lost pensions to your retirement pot
- SEE MORE When will you get the state pension?
It showed that the gender pension gap in the UK – the difference between the size of men’s and women’s private pension pots – is currently 35%.
This means that “for every £100 a man has in his pension, a woman has just £65”, MoneyWeek confirmed, creating a “significant shortfall” for many women.
‘The caring sex’
The reasons for such a gap are varied, but permeate society at every level. The Guardian suggested that “lower overall earnings, time off for childcare and other caring duties, and the greater number of women doing part-time work” all have a part to play.
Writing for the i news site, pensions expert Becky O’Connor said the “main problem” lies with an often incorrect assumption that women are “the caring sex”.
“It is assumed women care more and therefore have to work less, and it needs to change,” she told the news site. “This is an assumption that has deep roots in the pension industry,” she added.
The Daily Express agreed, suggesting the pension system may be “intrinsically biased”. Experts told the newspaper that private pensions were conceived at a time “very different” to today, and have not evolved in a meaningful way since. The Express added that the gap for women can be “potentially devastating” in later life.
Ros Altmann, a former pensions minister, told Money Marketing that “something urgently needs to be agreed” when it comes to helping women. “The cards really are stacked against women in the pension world,” she said. “Not only do they lose out in private pensions; they get less state pension too.”
The government plans to eliminate the gender state pension gap by 2040, FT Adviser reported last year, utilising auto-enrolment to “decrease the overall savings shortfall between men and women”.
How to bridge the gap
While the gap may feel difficult to bridge, there are potential ways for women to close the financial chasm.
Alice Guy, head of pensions at interactive investor, told the Express it can “make sense to up your pension contributions”. She suggested contributions of an “extra £200 per month” from the age of 50, could add up to “£64,104 by the time you reach 67”, assuming 5% investment growth.
Megan Rimmer, of financial firm Quilter, also pointed towards the government’s “encouraging policy” to get more parents to “retrospectively claim National Insurance credit” from child benefit, when speaking to Pensions Age.
Child benefit is seen as vital in helping with the cost of raising children and THP Chartered Accountants recently warned a failure to claim “can be a very costly mistake”, putting the state pension at risk.
A claim for child benefit could help parents secure valuable National Insurance credits, which count towards boosting the state pension.
