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Gender pension gap

Journalist: Jane Matthews, FTAdviser

ended 08. March 2023

Hello newspagers, 

We have some new research that is being released tomorrow around the gender pension gap and I would love to get the views of financial advisers and planners on the issue. 

Key findings include:

  • The gap is driven by differences in employment rates, hours worked and hourly wages, among all 22- to 59-year-olds, including those not in paid work, 59% of women were saving into a pension in 2019, compared with 66% of men. Average total annual pension contributions were £2,600 among women and £3,400 among men.
  • These gaps in pension contributions widen significantly after women have children. Two years before the arrival of a first child, prospective fathers and mothers make, on average, fairly similar contributions to their pension. However, six years after the birth of the first child, average contributions made by fathers are more than twice the average contributions made by mothers. Much of this gap is driven by differences in employment rates, hours worked and hourly wages that open up at this point.
  • Overall, there is little difference in the pension participation of men and women in paid work. However, this reflects differing compositions of the male and female workforces. Among private sector employees, a higher share of men (83%) than women (78%) were saving in a workplace pension in 2019. But more women work in the public sector – where pension participation and contributions are higher – and more men are self-employed, where pension participation is very low.
  • Among private sector employees, the gap between men’s and women’s pension participation is driven entirely by the fact that a higher share of women earn less than £10,000 per year and so do not have to be automatically enrolled into workplace pension saving by their employer.

I'm curious to hear your views on this, two questions you might consider in your response:

Is this an issue you see your clients raise? Do you have any thoughts on how it can be resolved? 

 

Many thanks, 
Jane 

1 responses from the Newspage community

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Editor
Scott Gallacher
Director at Rowley Turton
Closing the gender pension gap is a complex issue. While childcare responsibilities are a significant factor, the tax system also plays a role in exacerbating the gap.

It's worth noting that the tax system may favour higher earners, typically men, making pension contributions over their lower-earning spouses, typically women. However, contributions made by non-taxpaying spouses can also have tax advantages. To address this, a single-tier tax relief system could be introduced, but it would come with its own set of challenges.

As financial advisers, we play a vital role in helping our clients understand the impact of the gender pension gap on their retirement savings. By encouraging clients to start saving early we can help our clients achieve a more secure and comfortable retirement, regardless of their gender.