Women’s pensions are outstripped by men’s in every single job sector in the UK as they reach retirement, a new study reveals.
Some of the worst gaps are in top industries for female employment – healthcare, pharmaceuticals and social care – according to analysis of pots belonging to millions of pension savers.
The average pension fund of women aged 55-plus is £12,000, less than half the size of men’s which average £26,000, according to data from finance giant Legal & General.
Those sums only include pots held by its own scheme members, not other private or state pensions.
Gender gap: Women head into retirement with smaller average pensions than men in every single industry
Previous research has consistently shown women have far smaller pensions than men, as lower pay and unpaid caring work hit their ability to save for old age.
But the in-depth L&G research reveals the scale of the pension shortfall for women workers aged 55 and over no matter what industry they work in, ranging from 59 per cent in healthcare to 13 per cent in courier services – see below.
Source: Legal & General
‘There are many reasons for the gender pensions gap, ranging from women holding fewer senior positions and being paid less, resulting in lower pensions contributions, to the fact they are more likely to take career breaks due to caring responsibilities,’ says L&G.
Find out the impact of different lengths of maternity pay on pensions here, and how to avoid it happening to you here.
L&G also cited separate research it carried out showing that 28 per cent of women have confidence in their ability to make decisions about their pensions compared to 48 per cent of men.
Some 22 per cent of women feel confident managing investments versus 41 per cent of men, and 56 per cent of women feel on top of their savings versus 67 per cent of men.
The above figures reflect attitude rather than measurable financial knowledge or ability. However, lack of confidence can deter people from taking action to improve their finances.
L&G says the significant gender pensions gap is serious in itself but deepens when life expectancy is take into account.
Official statistics show life expectancy at birth in the UK is nearly 83 years for women and 79 years for men. That means women generally have to eke out smaller pensions for longer.
Tips to improve your chances of a decent pension
Katharine Photiou, commercial director of workplace savings at L&G says: ‘We’ve all heard about the gender pay gap, but very few discuss the gender pensions gap, despite the fact so many women experience it.
‘This shows more needs to be done to boost engagement with pensions, particularly with those who feel less confident, and who may need help on where to start when it comes to making financial decisions.
‘Millions of people would benefit from a wider range of support services to make more informed decisions about their savings and investments.
‘But this support needs to be personalised to achieve any real shift, and this is where government and industry need to work together.
‘Pensions can seem complicated but they’re just a regular savings plan with some tax perks. We need to demystify pensions and get back to basics.’
L&G has called on companies to publicly disclose their gender pensions gaps, and for the Government to take measures including reducing the auto enrolment age from 22 to 18 and allowing couples greater flexibility to pay into each other’s pensions.
It also suggests encouraging pay and job progression for part-time workers, promoting the inclusion of pensions in divorce proceedings, and prioritising childcare provision to help women work more hours.
What can you do to boost your pension?
L&G suggests doing the following to increase your retirement fund.
– Contribute as much as you can to your pension – and start early. Compound interest remains hugely underrated and poorly understood by both men and women.
– Check the charges on your historical pension pots. See if consolidating your pots will bring them down. Read This is Money’s guide to whether merging pots will benefit you here.
– Plan for a future full of Saturdays. Everyone underestimates how much they’ll need.
– Check how much your state pension will be and when you’ll get it. If it’s not going to support your ideal lifestyle, plan how you’ll cover any shortfall.
– Put a bit more into your pension whenever you get a pay rise. Read This is Money’s guide to making extra payments into your pot here.
– Talk through your pension planning with your partner. Make sure you know about each other’s saving plans, contribution limits and that you are both on the same page.
– Carry out a regular Midlife MOT. It’ll help you see how your finances are doing, and allow you to check in on your work and health wellbeing too.
– Make use of free support like the MoneyHelper or Retirement Living Standards websites.
– Keep a regular eye on your pension to make sure you’re in full control of it and saving for your ideal future.
What is L&G’s pension gender gap?
There is a 60 per cent gender pension gap for L&G workers at the point of retirement and an average gap of 32 per cent for current savers, says the firm.
It plans to monitor the gaps annually to ensure progress is being made, by reviewing internal policies and making changes such as better support for the menopause and a review of paternity and shared parental leave.
The firm adds: ‘L&G is committed to raising the profile of the gender pension gap across the companies it invests in and will continue collating data in order to include it in its stewardship activities going forward, as well as working with regulators, trade bodies and other providers on longer term solutions.
‘L&G has created a working group with 14 of its largest clients with 535,000 members and assets of over £7billion, to help them tackle inequality in their own pension schemes by the end of 2022 and plans to expand this group further in 2023.’
How to get your pension on track if you fear it is falling short
If you are worried about your pension and whether you will have enough, read a full 10-step guide to sorting it out here.
To get started, investigate your existing pensions. Broadly speaking, you need to ask schemes the following:
– The current fund value
– The current transfer value – because there might be a penalty to move
– Whether the pension is in a final salary or defined contribution scheme
– If there are any guarantees – for instance, a guaranteed annuity rate – and if you would lose them if you moved the fund
– The pension projection at retirement age.
You can use a pension calculator to see if you have enough – find This is Money’s here.
You should add the forecast figures to what you anticipate getting in state pension, which is currently £185.15 a week or around £9,600 a year if you qualify for the full new rate.
Get a state pension forecast here.
If you are tempted to merge your old pensions, check out some tips on how to decide here.
If you have lost track of old pensions, the Government’s free tracing service is here.
Take care if you do an online search for the Pension Tracing Service as many companies using similar names will pop up in the results.
These will also offer to look for your pension, but try to charge or flog you other services, and could be fraudulent.
If you are in your 20s, we have a special pension guide here. Self-employed people can find out how to sort out their pensions here.
Women, who tend to miss out because they get lower pay and do unpaid caring work, can find out how to increase retirement savings here.