Women could close gender pension gap by saving extra £35 a month
Women could close the ‘glaring’ gender pension gap by saving an additional £35 a month into their pension from early in their careers, a report has said.
The average pension pot for a young woman will be 11% less than for a man by the time they retire, according to the research by Fidelity International.
This is down to women earning less and taking time away from their careers to raise children or care for sick or elderly relatives, the investment company said.
But it found the gap could be closed if women dedicated an additional 1% of their salary towards their pension early on in their careers – the equivalent of £35 per month on average in contributions over 39 years.
The Financial Power of Women report interviewed 1,000 women and 1,000 men across the UK and found salary limitations and household costs and chores were among the barriers stopping women from investing.
A quarter of women said a reduction in household costs would help them to invest more each month and a third of women said a salary increase would encourage them to invest.
It also found women were apathetic when it came to the pensions they did have, with more than half not knowing where their pension was invested and a third not knowing how much their pension was worth.
It said women tended to prefer cash products over riskier investments and that women preferred the perceived ‘safe haven’ status of property.
The report said the average pension pot for a man currently aged 25-34 putting money into a pension in line with the government’s auto-enrolment contributions will be worth £142,836 at the state pension age of 68 compared to £126,784 for a woman.
To close this gap, Maike Currie, investment director at Fidelity International, said the investment industry needed to do more “to build trust and an understanding of their products and services” among women.
“This is about doing all we can to get the other 50% of the population to harness their financial power – the breadwinners, homemakers, the ones looking after the family, caring for sick and/or elderly relatives, managing the purse strings and teaching the next generation about money,” Currie said.