Pension warning as women need an extra 19 years work to close gap as they fall £136k short | Personal Finance | Finance

Women face needing to work for an extra 19 years to retire with the same pension savings as men typically, research shows.

Career gaps, caring responsibilities, childcare costs and lower earnings contribute to women often having less money saved for retirement than men.

Women retire on average with pension savings of £69,000, compared with £205,000 for men, the research by pensions provider NOW: Pensions and the Pensions Policy Institute (PPI) found.

To plug the gap, women would need to work and save for an extra 19 years on average.

A female saver would need to begin saving for retirement at the age of three in order to leave the workforce with the same amount of money as their male peers, the report found.

The persistent gender pension gap serves as a glaring reminder of the inequalities women face throughout their working years and into retirement, an expert has explained.

Commenting on the research, Becky O’Connor, Director of Public Affairs at PensionBee said: “In the face of escalating living expenses and a steadily increasing State Pension age, the obstacles looming over the next generation of female savers demand proactive intervention.

“Addressing this entrenched issue demands a unified effort from policymakers, employers, and society at large. Equal pay, including parental leave pay, equitable career opportunities, and flexible working policies which allow employees to share unpaid care work equally are imperative.”

As automatic enrolment into workplace pensions starts at the age of 22, the 19-year gender pension gap means a girl would need to start saving for retirement from three years old in order to have kept up with men by retirement age, researchers suggest.

But women often live longer than men, meaning their retirement pots also need to last for longer.

Even with the gap there are 1.9 million employees not enrolled into a workplace retirement plan. Some 79 percent of workers who earn less than the automatic enrolment earnings threshold are women.

According to NOW, if the age and earnings thresholds were removed from automatic enrolment, an extra 885,000 young employed women would become eligible for a workplace pension.

NOW: Pensions said the £10,000 earnings trigger for people to be automatically enrolled into a workplace pension should be removed.

Lauren Wilkinson, senior policy researcher at the PPI, said: “By their late 50s, women have average pension savings worth less than two-thirds of men’s, with a substantial proportion of this difference stemming from inequalities in the labour market, including differing working patterns and the gender pay gap.

“While there are some pensions policy options that could be introduced to potentially mitigate the gender pension gap, it’s unlikely to significantly reduce without changes in labour market conditions and gendered divisions of domestic labour.”

A Government spokesman said: “The success of automatic enrolment has transformed the UK pensions landscape and brought millions of women into pension saving for the very first time, and our plans to expand automatic enrolment – by abolishing the lower earnings limit for contributions and reducing the age for being automatically enrolled to 18 years old – will benefit women and low earners, once poorly served or excluded from workplace pensions.

“Alongside this, our expansion of free childcare in England means working families could save an average of £6,500 per child per year, and we recently published the first official measure of the gender pensions gap, which will help track the collective efforts of government, industry and employers to close it.”

Source link