Why are so many women missing out on the pension pot, and what can they do about it? Talis IFA lifts the lid…

March 29, 2023

We’ve all heard about the gender pay gap, but, despite women’s widespread experiences, the gender pensions gap is less well-understood.

In this article, Talis IFA takes a look at new research that highlights the problem, and suggests a few things women can do to bridge the gap.

What is the gender pensions gap?

The gender pension gap is the percentage difference in income between men’s and women’s pensions, and it begins at the very start of a woman’s career. New research has revealed that women’s pensions at retirement age are half the size of men’s, and that the problem affects every industry in the UK – even those where female workers dominate. ^[1]

According to the research, the gender pensions gap exists regardless of average pay across different sectors.

The largest gender pensions gaps were found in healthcare (59%), construction (51%), real estate/property development (48%), pharmaceutical (46%), aerospace, defence and government services (46%), and senior care (45%).

Most revealing of all, three of these industries – healthcare, pharmaceuticals and senior care – are key industries for female employment ^[3].

Why is this an additional problem for women?

On average, women are likely to live four years ^[2] longer than men, so this adds to the issue as it means that, by retirement age, they need to have saved around 5% to 7% more than their male counterparts.

Reasons for the gender pensions gap

The gender pensions gap is a complex picture, with many contributory factors.

Two key factors are that women hold fewer senior positions and are paid less, resulting in lower pension contributions. They are also more likely to take career breaks due to caring responsibilities.

Of those that have taken a career break, 38% did not know the financial impact it had on their pension contributions and therefore on their pension at retirement age ^[4].

There’s also a gender confidence gap when it comes to managing pension pots. Only 28% of women said they had confidence in their ability to make decisions about their pension, compared to almost half (48%) of men ^[5].

This lack of confidence affects other financial decisions, too, with only 22% women reporting feeling confident about managing their investments compared with 41% of men. While the gap is smaller, there is also a disparity in confidence when it comes to managing savings (56% of women versus

67% of men).

 

What can women do to bridge the gender pension gap?

Some of the factors are beyond individual people’s control, but there are steps you can take to help yourself:

1. Contribute as much as you can to your pension – and start early. Compound interest remains hugely underrated and poorly understood, but makes a huge difference over time.
2. Check the charges on your historic pension pots. If appropriate, see if consolidating your pots will bring them down.
3. 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.
4. Put a bit more into your pension whenever you get a pay rise.
5. If you’re in a long-term relationship, 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.
6. Keep a regular eye on your pension to make sure you’re in full control of it and saving for your ideal future.

 

If you’d like some tailored, independent advice about your pension, we’d be happy to talk. Contact us here. 

 

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless plan has a protected pension age).

The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits.