Women on an average salary could end up with £70,000 less in their pension pot than men as they continue to face ‘systemic challenges’, new research suggests.
Many women spend much of their lives working part-time to juggle caring responsibilities for children and other family members, and so make smaller pension contributions.
The average woman working full-time in the UK could have saved £137,863 by retirement, while for men the figure is some £41,000 more at £178,871, according to workplace pension scheme Nest.
When working part-time, the pension gender gap widens from £41,000 to £72,000
But when part-time work is included, the gap between genders widens to around £72,500, as a male worker could end up with a pot of £161,999, while a woman could save just £89,449.
The calculation, based on average UK wages, made several assumptions, including about investment growth and that someone would start saving aged 22 and retire at 68.
‘Women face systemic challenges in saving as much as men do for their retirement – these begin at the start of their working life and have a ripple effect throughout their life as they juggle conflicting priorities, lasting well into retirement’, said Nest’s director of strategy and corporate affairs, Zoe Alexander.
She warned that the ongoing impact of Covid-19 could also ‘disproportionately’ affect women, further undermining their pension savings potential.
When surveyed in June, women saving with Nest were more likely than men to say they were only just about managing to make ends meet financially – at 34 per cent versus 25 per cent.
Helen Morrissey, pensions specialist at Royal London, said: ‘A mix of part-time work and time out of the workforce blows a hole in their retirement planning that is difficult to recover from and the cost of childcare can deter many women from resuming pension contributions at a later date.
‘There is no one solution to this problem but Government must look at how we can keep women in pensions for longer. The issue of providing good quality childcare at a decent cost is vital to this, as well as more information around maternity leave and its impact on pensions.’
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