The Gender Pension Gap: How to overcome it -Royal London

Royal London’s research into workers’ retirement savings habits shows that pension contributions differ significantly by age, job type, and income. The one consistent is that the gender pension gap impacts women at every stage of their career, leaving them worse off in retirement.

The level of contributions workers and their employers make affects the lifestyle they will enjoy in retirement and despite near parity in pension participation rates between the sexes, data from nearly two million customers saving with Royal London shows that, compared to men, women typically save less for their retirement throughout their working lives, with a gap of 16% in their 30s rising to 43% by the time they reach age 55.

While there was once a perception that women were less likely to engage with their pension, the narrative has changed. Royal London’s research showed that when it comes to the importance placed on pensions as a workplace benefit, there is no gender difference. In fact, women are more likely than men to put pensions at the top of their wish list when applying for a new job.

One of the main factors responsible for the gender pensions gap is the different working patterns between men and women. Many women take on lower paid part-time jobs to allow them to juggle employment and looking after others and significantly, around one million women below age 50 don’t work due to caring responsibilities.

Many employers offer valuable pension matching, so it’s encouraging that, overall, two-fifths of workers put more than the standard amount into their pension each month to take advantage of employer matching. However, there is a clear imbalance between the genders with more men than women taking advantage of employer matching contributions (48% versus 41%). Importantly, affordability is a barrier for half of women, compared to 39% of men who cite this as the reason for not using employer matching.

One of the best ways to overcome gender saving barriers is by preparing for your long-term future and to start saving as early as you can. Saving for retirement as soon as you start working, and before you start a family, enables small amounts of money to grow into larger sums over time.

Another method is to review your pension savings regularly, at least once a year. As well as showing how much is in your pension, it will also let you know if you are on track for the retirement you want. Understanding how much you need in retirement is important. The PLSA’s Retirement Living Standards can help with this. Discovering any potential shortfall sooner can give you time to take action to improve your lifestyle in retirement.

When you get a pay rise, try and allocate some or all of the extra money into your pension and investigate whether your employer offers pension contribution matching, allowing you to maximise your savings. Increasing your regular pension contributions using matching, if you can afford to, will really boost your pension.