There has recently been many discussions about the difference between men and women’s pension pots so we thought we would discuss further.
Recent research by Profile Pensions, revealed that the gap is such that it means men can expect to retire on average of £21,800 per year compared to women, for whom it is £16,900.
“Overall, the report found UK women hold 39% less in their pension pots than men.”
The main reasons for this difference in men and women’s pension pots are:
- Due to women being paid less, and contributing a smaller amount each month into their pension savings.
- More women work in part-time employment.
- More women are likely to take time out of the workplace to have children.
- Women are likely to be employed at below the auto-enrolment threshold of £10,000 per annum.
The above research highlights to us that the gender pay gap and gender pension gap go hand in hand. Men earn on average more than women so therefore can afford to save into their pension pot.
What can women do to increase their pension pot?
- Make sure you opt into your workplace pension. Under current UK law, employers contribute 3% to the employee’s pension pot, and 5% from the employee’s pay.
- If you do take maternity or a career break then keep paying into your pension pot.
- If you are self-employed set up a personal pension and contribute as and when you can.
- If you take time out of work to look after children make sure you register for Child Benefit, even if your partner earns over £50,000, as this gives you a credit towards your state pension entitlement.
- Talk to a financial advisor to discuss your retirement goals and calculate how much you should ideally be saving.
Regardless of the above, you should start saving whatever you can – now.
Please note: A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investment (and any income from them) can go down as well as u, which would have an impact on the level of pension benefits available.