Pension Gender Gap

The large Gender Pension Gap – is it being addressed?

Even with the Gender Pay Gap narrowing, there is still a large gender Pension Gap – how can this be addressed?

This article is for information only and no recommendation is being made or should be construed from the contents of the article. Always seek independent financial advice prior to taking any action.

 Over the past decade or two, there has been a lot of progress in narrowing the gender pay gap. Positive recent reports from the Office of National Statistics (ONS) now say that the within the UK the gender pay gap for full-time employees is at a record low of 9.4 per cent.

To add to this, the government has put it’s support behind redressing this imbalance by introducing new legislation, making it a legal requirement for all businesses with over 250 employees to report data on the differential between what they pay their male and female staff.

However, one worrying statistic from a financial point of view is that there is still a large gender pension gap which is not being addressed at the same speed, or attracting a similar amount of publicity.

Why is there a Gender Pension Gap?

The principle reason for this shortfall in retirement saving is that, in many cases, women decide to have children, and are predominantly the caregivers. They are more likely to take time out from formal employment to raise their offspring.

So given the pensions divergence begins in the 30s, it would be safe to predict that that having a child is what creates this gender gap.

Unfortunately, this adds to the impossible dilemma that many women face as it would seem taking time off work to have a child impacts not only their present earning potential and, perhaps, their career progression, but also their future income and quality of life.

Some statistics suggest that the average woman has £24,900 put away at retirement, but the average man has almost three times more at £73,600. On top of this, women save £50 a month less than men, at £128 and £178 respectively, but almost a quarter do not save anything at all. And the result is that women very often have to live on lower incomes in their later years.

How can we address this problem?

A recent research claimed that one in 10 women in the UK say that their partner is responsible for pension planning, therefore the full implications of not having a sound pension plan are not realised.

It is crucial that everyone has a good understanding of their own individual pension provisions to ensure they are on target to have a comfortable standard of living in retirement should their existing living or marital circumstances change.

Even if someone stops working to look after their children, therefore leaving their workplace pensions scheme, it is important that they set up a separate private plan to save into. You can pay in up to £2,880 a year, which tax relief can boost to £3,600.

 How can we help?

As fully qualified pension advisors, at Prosperity IFA, we offer professional advice and guidance on all the options open to you and can recommend the best way forward.

We are always happy to review your current pension arrangements. If you would like to explore what the best move would be for you or want to understand the options available, talk to one of our expert Pension Advisors on 01892 300303. For more information on how we can help you, go to our website www.prosperityifa.com.

 

 

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