Pensions gender gap widens
New research from NOW: Pensions showed that in 2017, the average man had £424 saved while the average woman had £334, a difference of £90. By 2018, the gap had grown with men having on average £559 saved versus women who had £433 saved, a difference of £126.
In percentage terms, this means the average woman’s pot has fallen from 78.5% the size of a man’s pot in 2017 to just 77.4%. This means women own only around 37% of pensions wealth held in the NOW: Pensions Trust account.
This disparity can make a meaningful difference over time. NOW: Pensions’ analysis suggests that for those earning an average salary, in 40 years’ time, pension pots will have grown to £50,514 for men yet just £40,332 for women. This is even worse if women take time out of the workplace to have children – with a five-year career break, the women’s average pension pot falls to £33,986 – leaving their pension pot 33% less than men.
By 31st March, employers with 250 or more employees will have to publish their gender pay gap data. This is part of government-imposed mandatory requirement which came into effect in 2017. This may galvanise companies start equalising pay between men and women and would go some way to addressing the pensions gap.
Amy Mankelow, director of communications at NOW: Pensions said: “The gender pay gap not only affects women’s working lives but leaves them more vulnerable to poverty in retirement.
“Women’s pension savings face a double whammy as women typically earn less and are more likely to work part time and take career breaks to care for children or elderly relatives.
“Auto enrolment does little to address this inequality as millions of women are prevented from saving altogether as they earn less than the £10,000 auto enrolment trigger. This means that a large proportion of part-time workers, who are much more likely to be women, don’t have the opportunity to save in the first place. The fact that auto enrolment minimum contributions remove the first £6,136 of earnings from the auto enrolment calculation also hits the savings of more women than men.
NOW: Pensions is calling on the government to remove the £10,000 auto enrolment trigger and get rid of the lower earnings band to give more women the opportunity to save for their retirement.
According to a report by the Pensions Policy Institute commissioned by NOW: Pensions, over three-quarters (77%) of employees earning less than the auto enrolment trigger are women. Women make up a disproportionate number of part-time workers, who tend to be hit harder by the cap. The report estimates that 3 million individuals would become eligible for auto enrolment if the earnings trigger was removed.