Research from NOW: Pensions and the Pensions Policy Institute (PPI) found that women retire with an average pensions savings of £69,000 (€81,000), compared to £205,000 for men. In order to close this pension gap, women would need to work an extra 19 years, according to the duo.
They added that women make up 79% of workers who earn less than the automatic enrolment earnings threshold, which means that 1.9 million women in employment are not automatically enrolled into a workplace pension.
If both age and earning thresholds were removed from auto-enrolment, an additional 885,000 young women in employment would become eligible for workplace pension, NOW: Pensions and PPI said.
Additional measures the report suggested include introducing a family carer’s top-up to make up for career interruptions, and ensuring affordable childcare is available for those who want to return to work.
The report also suggested pension pots should be considered in divorce.
Joanne Segars, chair of trustees at NOW: Pensions, said: “It’s hard to believe that by the time a young girl starts school at four, she will already be falling behind a boy of the same age when it comes to providing for her retirement. Yet this is the reality many girls face as they leave education and enter the world of work.”
She said that despite enacting some “important policies” in recent years to improve financial opportunities, outcomes and equity between men and women – like auto-enrolment and gender pay gap reporting – the report is a timely reminder of the work that still needs to be done.
“We believe it can and it must,” she said, adding: “Our research is an important step in identifying, defining, and addressing the problem and what we can do as a society to fight for fair pensions for all.”
Lizzy Holliday, director of policy and public affairs at NOW: Pensions, added that policymakers have made important decisions in recent years which are already making a substantial difference to the way workers and their employers are providing for retirement.
However, she pointed out that, as the report shows, the scale of the gender pensions gap remains vast and will require bolder policy actions.
“Some of the solutions are broader than traditional pension policy. Childcare and gender pay gap issues must be given the urgent attention they require. But setting out the roadmap for the future of auto enrolment including tackling the difficult issue of adequacy in retirement – which affects women disproportionately given lower pension wealth- should be front and centre of next steps,” Holliday noted.
Lauren Wilkinson, senior policy researcher at the PPI, said: “While the gender pension gap is widely recognised, there is a lack of clear consensus in terms of definition, magnitude and potential solutions.”
She said that measures of pension wealth and retirement income can both be useful to understanding the magnitude of the gap, but the approach taken in this year’s edition of the underpensioned report provides a more nuanced analysis of the causes of the gap.
“By their late 50s, women have average pension savings worth less than two-thirds of men’s, with a substantial proportion of this difference stemming from inequalities in the labour market, including differing working patterns and the gender pay gap,” she said.
“While there are some pensions policy options that could be introduced to potentially mitigate the gender pension gap, it’s unlikely to significantly reduce without changes in labour market conditions and gendered divisions of domestic labour,” Wilkinson added.
Commenting on the report findings, Pete Glancy, head of policy at Scottish Widows, commented that far more needs to be done to tackle the gender pension gap, with Scottish Widows own research suggesting that right now, more than a third of women are not on track for even a minimum retirement lifestyle.
He said: “Action must focus on putting the right measures in place for women to be able to stay in high-quality employment whilst raising families, including improving access and funding for childcare.”
He added that pensions policy can play a crucial role in helping lower-income women save.
“Without this, women in their 20s and 30s today could still be stuck in the pensions gap, left to face a real and unfair struggle in retirement,” Glancy continued.
Emma-Lou Montgomery, associate director at Fidelity International, added that closing the gender pension gap remains one of the biggest financial challenges.
“Lower income levels combined with career breaks or periods of part-time work to care for children or loved ones, means that we are very rarely on a level playing field when saving for retirement. And the reality is that many women face working longer, or retiring with less,” she said.
She highlighted that the attention on this issue must lead to action, adding: “At a policy and industry level we need to look at how pensions support the lives women lead.”
Montgomery said: “We need to address engagement levels, increase awareness of this very important issue and perhaps most importantly empower women and equip them with the tools to take steps themselves to bridge the pensions gender gap.”
Read the digital edition of IPE’s latest magazine