The average woman in the UK will reach their 50s with nearly half of the pension savings of men, new data from The Department of Work and Pensions (DWP) reveals.
In a report published today, the DWP has revealed that the Gender Pension Gap for women aged between 45 and 49 is as much as 47%.
Between 2018-2020 the gender pensions gap in private pensions was found to be approximately 35%.
In the AE-eligible population, female pension wealth is higher than men’s in their thirties but plunges to 33% less than men in their early forties.
Clare Moffat, pensions expert at Royal London, said: “Data released today by the Government shows the Gender Pensions Gap, the gap between male and female private pension wealth, is 35% for all women at age 55.
“But worryingly women aged between 45 and 49 have only around half the pension of men.”
She added: “While the introduction of automatic enrolment 10 years ago has helped more women than ever save into a pension, the UK still faces a yawning gender pension gap.
“The working patterns of women and the fact that they might work more than one part time job – leaving them potentially ineligible for automatic enrolment – all have an effect on women’s pensions.
“Working patterns and caring responsibilities contribute to the gap. The Government stated in March that they will lower the age when someone is automatically enrolled into a pension to 18 from 22 and also that the lower earnings limit will be removed which means that there will be pension saving from the first pound of income.”
Moffatt continued: “But there is another issue. Women are starting their 50s, traditionally a time when someone would be saving the most into their pension, with this huge gap in pension savings, and also dealing with the menopause and potentially caring for older relatives as well.
“Menopausal symptoms can prevent women from working and saving as much as they would like, with almost a million women leaving their job as a consequence, while many others are forced to reduce their hours.
“Quite apart from the loss of income, this also means women may miss out on important pension savings at a key stage in their life, resulting in them being up to £126,000 worse off in retirement, potentially widening an already significant gender pensions gap.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The gender private pension gap is 35% – less of a gap, more of a gaping chasm! It is shrinking – it was once as high as 42%, but it is still way too high.
“There is room for optimism though – for the auto-enrolment eligible population the gap is slightly smaller at 32% so we can hope that gap continues to close as more women save into workplace pension schemes.
“Participation rates are also high – in some cases higher than men and the real term increase in total female pension savings is £4bn higher than for men since the introduction of auto-enrolment.”
She continued: “However, the structural problems that derail women’s pension planning are all too clear. The gender pension gap is at its smallest between the ages of 35-39 at 10%.
“Among the AE-eligible population women’s pension wealth is higher in their thirties. However, once they hit their forties it unravels as the mix of time out of the workforce, lower pay and part-time work does its damage. The gap widens to 47% for the 45-49 age group. For the AE-eligible population it hits 33% for the 40-44 age group.”
“The Government recently announced childcare reforms which should help more women keep working and contributing to their pensions, but the gender pension gap looks set to remain with us for some time yet.”
