The gender pension gap
5 Nov 2024
Understanding and bridging the divide
The gender pension gap is an issue that starts early in women's careers and continues to widen over time. By retirement, men’s pension pots are often double those of women. In the UK, men over 50 typically have an average of £84,205 saved, while women have just £39,654. This disparity can significantly impact retirement comfort and financial security.
Early career disparities
The divergence begins at the start of a woman’s career, with an initial gap of 16% in pension savings. This gap can escalate, reaching 51% for women in their fifties and expanding further by retirement. Multiple factors contribute to this, including pay disparities, career breaks for childcare, part-time work, and lower confidence in handling investments.
The impact of family responsibilities
Women often take a larger share of childcare responsibilities. For example, 37% of mothers have left their jobs to handle childcare, compared to 18% of fathers. This can considerably affect their pension contributions and future income. On the other hand, men’s pensions are usually unaffected by having children.
Divorce: a critical moment
Divorce can also play a significant role in the pension gap, yet few people seek financial advice during separation. Women are often less likely to claim their share of a partner’s pension wealth, despite entitlement. With one in three divorces occurring after age 50, understanding and addressing these financial impacts is crucial.
Steps to bridge the gap
While the picture might seem daunting, there are proactive steps women can take to mitigate the gender pension gap:
Start Early: Save into your pension as early as possible. The earlier you start, the longer your money has to grow.
Involve Your Partner: Discuss how you can balance the financial impact of raising a family. Consider sharing parental leave and childcare costs, and discuss potential ways for your partner to support your pension if you take time off work.
Plan for Divorce: While nobody hopes for divorce, it's wise to consider pension implications in any discussions or agreements, ensuring your financial security is preserved.
Track and Consolidate: Use tools like the government’s pension tracing service to track lost pensions. Consolidating them can make managing your savings simpler.
Check Beneficiary Details: Ensure your pension beneficiary information is current, to control who benefits from your savings.
The bigger picture
While government policies and workplace practices continue to evolve, individuals can take steps to protect and enhance their financial futures. Engaging in informed conversations about shared financial responsibilities, and staying informed about pension options, can make a positive difference.
The gender pension gap is a challenge, but with awareness and action, women can work towards achieving greater financial equality and security in retirement. Use resources, ask questions, and take control of your pension journey with confidence.
