Pensions Gender Gap Ever-Widening
The number of women who have not enrolled into a pension continues to dramatically widen.
There has always been a big gender gap in UK retirement incomes as last year research revealed that the gender gap almost trebled over the past ten years, according to the Royal London’s analysis.
Meanwhile, last month research from Aegon found that the number of women without pension arrangements has nearly doubled from 7% in 2017 to 13% – and remains higher than the proportion of men without pension arrangements.
An analysis of the research found two main reasons for the pensions gender gap which is complete lack of pension awareness, and the criteria involved in auto-enrolment. These two causes are the likely motives to pension exclusion which is stopping women from saving for their retirement in the workplace.
The research revealed that more than double the number of women (34%) compared to men (16%) have no idea how much they have saved in their pension pot. In addition, women are more likely than men (40% vs 32%) to have never investigated what they will need, income wise for their future when they reach retirement age.
This is concerning news as it seems to indicate a lack of awareness which puts women at a greater financial risk than men when it comes to planning for later life and retirement.
The Chartered Insurance Institute delivered a report in 2016 entitled ‘Risk, exposure and resilience to risk in Britain today – Women’s Risks in Life’ which exposed the stark truths about the risks of 21st century living – and presented a snapshot of women’s and men’s risks in life in Britain today.
The report revealed a transparent gender risk gap which leaves women at a “significantly greater level of risk than men”.
It indicated in 2016 that women are still more vulnerable to an array of risks than men. The report states “While women are increasingly better educated than men, they earn less, feel less financially secure, provide the bulk of unpaid care, have smaller pensions, face greater hardship in later life and struggle to pay for their own old-age care.”
Kate Smith, Head of Pensions at Aegon, commented:
“It’s hugely disappointing to see that despite the attention being given to addressing the gender pay gap, this increased awareness does not seem to have inspired women to show more interest in their pensions.
“Knowledge is key to helping solve the gender pension gap so it’s really worrying to see that more than a third of women remain in the dark about what they have saved for retirement – if anything at all.
“We already know that women are at a disadvantage in terms of pay, childcare responsibilities and costs and reduced working hours but by not having a complete picture of their financial situation, they are putting themselves at a further disadvantage.
“This lack of interest in pension savings is exacerbated by the fact that women are also being let down by the current auto-enrolment criteria.
“Women who are more likely to be lower earners and work part time, are missing out on the benefits of retirement saving as they are less likely to meet the eligibility criteria for auto-enrolment. And those who are self-employed, risk being in a similar position without access to auto-enrolment.
“Auto-enrolment needs to be more inclusive to include lower earners, who are disproportionately female. A solution needs to be found for individuals with multiple jobs, each below £10,000 allowing them to benefit automatically from an employer contribution. This will help to close the gender pension gap.”