Women need to work extra 19 years to build the same pension pot as men, new research finds

by | Feb 7, 2024

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  • New report from the Pensions Policy Institute (PPI) examines the gender pensions gap (The Underpensioned: Defining the Gender Pension Gap)
  • Women’s pension assets less than two-thirds (62%) of men’s by their late 50s
  • To bridge the gender pension gap women would need to contribute for an additional 19 years or at a 6% higher rate than men
  • The gender pay gap plus different working patterns are partly to blame for the gender pensions gap
  • Government, regulators and the industry need to work together to find a range of solutions to tackle the gender pensions gap

Rachel Vahey, head of public policy at AJ Bell, comments:

“This new report casts a long shadow over the state of women’s pension saving in the UK, indicating women would need to work on average for another 19 years to emerge at retirement with the same pension savings as men. This is backed up by AJ Bell’s recent research for Money Matters, where we found that on average men have almost £49,000 in their pension pot compared to just over £32,000 for women, a startling 50% higher. 

“In 2024, 54 years after the introduction of the Equal Pay Act, this seems a strange predicament in which to find ourselves, but the labour market and social conventions aren’t moving quickly enough to help most working women today. 

 
 

“Men still earn more than women and so pay in higher contributions. The gender pay gap is, unfortunately, alive and well. Even if women start off earning only 3% less than men in their 20s, this increases sharply to 10.3% for those in their 40s, as more women move to part time hours or stop working altogether after having children. 

“Add in the crippling cost of childcare, and often having to meet inflation-busting rises in food and energy bills, and it’s easy to see how women end up with little left over at the end of the month to save. Our research showed 41% of men pay more into their pension than the minimum requirement, compared to only 27% of women.

“There is a long road to pensions equality. Closing the gender pay gap would certainly help. But many women just don’t engage with pension savings. Government, regulators and the pensions industry need to find ways of reversing this trend and getting women thinking about their financial future. “

 

AJ Bell Money Matters tips for financial fitness

AJ Bell’s Money Matters campaign  (ajbellmoneymatters.co.uk) aims to help more women start investing, offering events, podcasts, articles and practical tips:

Money Matters tips for financial fitness include:

 
  • We’re a nation of cash lovers and women are often guilty of sitting on too much cash. Work out what you need for your emergency fund and consider investing anything else for the long-term
  • It is never too late to engage with your pension. That could involve working out where all your pensions are and figuring out how much you have saved, to increasing your contributions, choosing your own investments or consolidating all your pensions into a single account to make them easier to manage
  • Having frank conversations is important. That could mean discussing how childcare costs are divided with a partner, or how you split childcare responsibility and what happens if one of you isn’t working while caring for children. It could also mean speaking to employers about different working patterns or a pay rise. These conversations may be difficult, but they could provide a huge boost to your financial future 
  • For some people it will help to call the experts. The government’s Money Helper service offers free support, while others may choose to appoint a financial adviser to help them get to grips with their finances

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