Auto-enrolment exemptions fuel pensions gender gap
More than double the number of women (34 per cent) compared to men (16 per cent) don’t know how much they have saved in their pension.
Research from Aegon found that women (40 per cent) are more likely than men (32 per cent) to have never estimated their income needs for retirement.
In addition to this, the number of women without any pension arrangements has nearly doubled from 7 per cent in 2017 to 13 per cent, and remains higher than the proportion of men without pension arrangements.
Aegon said the two main causes of this are a lack of pensions awareness among women, and the auto-enrolment criteria, which are more likely to exclude women from saving for retirement in the workplace.
Kate Smith, head of pensions at Aegon, said: “It’s hugely disappointing to see that despite the attention being given to addressing the gender pay gap, this increased awareness does not seem to have inspired women to show more interest in their pensions.
“Knowledge is key to helping solve the gender pension gap so it’s really worrying to see that more than a third of women remain in the dark about what they have saved for retirement – if anything at all.
“We already know that women are at a disadvantage in terms of pay, childcare responsibilities and costs and reduced working hours but by not having a complete picture of their financial situation, they are putting themselves at a further disadvantage. That picture includes their pension.
“Showing an interest in what you have saved in a pension or what you might need, could be the difference between the retirement you want and the retirement you get. The first step is to ensure you are on the right track to get it, you can only do this by getting as much information as possible and this applies to both men and women.”
The lack of interest in pension savings is exacerbated by the fact that women are also being let down by the current auto-enrolment criteria. Women are more likely to be lower earners and work part time, and so are less likely to meet the eligibility criteria for auto-enrolment. Self-employed women risk being in a similar position without access to auto-enrolment.
“Auto-enrolment needs to be more inclusive to include lower earners, who are disproportionately female,” said Smith, “A solution needs to be found for individuals with multiple jobs, each below £10,000 allowing them to benefit automatically from an employer contribution. This will help to close the gender pension gap.”
How women should plan for retirement
- Those in employment shouldn’t opt-out of their workplace pension scheme
- Maximise employer contributions
- Self-employed women should set up a personal pension and aim to pay regular contributions into it
- Write a retirement plan with goals and how to achieve them
- Regularly review pension contributions, fund choices and how much is saved
- Those who take maternity leave or time out of work as a carer should try to make up the pension shortfall
- Get a State Pension scheme forecast and fill in any National Insurance gaps to maximise your State pension.
- Talk to your partner about your combined pension savings.
- Seek guidance or advice from a professional