When we look at our finances for the future, we’ve probably all wondered the same thing – is there really that much difference between what men and women get in pensions?
The short answer? A resounding YES!
The long answer (don’t worry, it won’t be too long and complicated!) is that the gender pension gap is real and growing.
According to Aviva, the average woman's pension fund is a lot smaller than the average man’s, and the gap only increases as we get older. The research found that the gap in pensions contributions in 20–24-year-olds is 13%, rising to 49% in 65–69-year-olds.
So why does this happen?
It’s mostly down to the different ways men and women work. Women tend to work part-time and take time out of the workplace due to maternity and childcare responsibilities. This leads to gaps in pay and National Insurance contributions, as well as smaller pay packets compared to men. As men tend to have longer, uninterrupted careers they get promoted more quickly than women who have gaps in their CVs. And that leads to higher wages and greater pensions contributions.
The gap in pensions is the equivalent to about £444 per month. According to the lender more2life, even though women seem to be better at saving than men, they might not have as comfortable retirement. And this didn’t change during or after the pandemic, with women saying their financial situation had not improved since COVID hit.
How to close the gap?
So, what can women do to help close this gap and enjoy as comfortable a retirement as men?
- The key thing we can advise you to do is to start early. Did you know you can start a pension from birth? Sign your children up for a scheme as soon as you are able, they’ll thank you for it! They can take over the investment when they reach 18.
- If you’re enrolled in a pension scheme, look into increasing your contributions if you can.
- If you’re on a low income at work, have a chat about joining the company pension scheme – it’s better to make some contribution, no matter how small, than none.
- If you’ve taken time away from work, check out your National Insurance contributions. See if there are any gaps you can close by making payments. You can check your contributions history on the Government website.
- Don’t forget your partner! Talk to them about what both your stakes are in the other’s finances. Do your pensions pay out to widows or widowers? And what happens if you get divorced?
All these small, incremental actions can help you close the gaps in your pension contributions and secure a happy and comfortable retirement. Now, that’s worth investing in!