Women have total pension savings worth nearly 55% less than men when they reach retirement, according to research by Mercer, Now:Pensions and the Pensions Policy Institute.
The data highlighted that by the time a woman reaches the retirement age of 67 years, she will, on average, have around £105,000 in pension savings. In comparison, a man will, on average, have saved £232,000 in the same period, creating a savings gap of £127,000.
Women are more likely to work part-time and 79% who do so earn less than £10,000, while only 9% of part-time male employees earn below this figure.
Women are also more likely to receive lower levels of pay due to the gender pay gap, where they contribute less to their pension. Men and women aged 70-74 years have a 50% gap, and the gap is highest at age 75 and above, where it is around 74%.
According to Now:Pensions the £10,000 automatic-enrolment earnings trigger and the lower earnings limit should be removed, because this could bring 726,000 more women into auto-enrolment and see up to £218 million of annual contributions.
Patrick Luthi, head of DC product at Mercer UK and chief executive officer at Now:Pensions, said: “We acknowledge there has been some progress in addressing the gender pension gap. However, women in the UK still face significant barriers to build adequate pension savings, which can lead to poor retirement outcomes. We continue to advocate for the removal of the auto-enrolment earnings trigger and the lower earnings limit. These changes would go some way to addressing this historic imbalance by helping women to build a financially secure future.”
Joanne Segars, chair of the trustee board of the Now:Pensions Master Trust, added: “We are committed to pushing for changes to make the UK’s pensions system more inclusive and equitable. We’re proud to continue raising awareness of the savings gap, which is hiding in plain sight. We have long called for urgent policy action to help reduce the huge gender pensions gap we see today. Without further changes, millions will continue to struggle to achieve a secure retirement.”
