Research by Legal & General (L&G) has found there is always a difference in pension pot sizes between genders, even at the start of men and women’s careers.
This initial gap (17%) remains largely unchanged until men and women reach their thirties, but doubles to 34% by the time they are in their forties.
The gap increases to 51% in the fifties age bracket, and then to 56% at retirement.
Rita Butler-Jones, co-head of Defined Contribution at Legal & General, said much like the gender pay gap in wages, the gender pension gap is fast becoming an issue which needs to be higher on HR’s radar.
She told HR magazine: “The decision to take a career break to raise a family has a clear impact [on a woman’s pension], though there are a number of other factors at play here including lower pay relative to male peers at all stages of a woman’s career.
“A lack of pension contributions when a woman is away from the workplace, and the potential impact that raising a family has on a woman’s career progression, also plays a role in the gender pension gap.”
Butler-Jones said women are also more likely to face financial struggles following a divorce from their partner.
“Women are significantly more likely to waive their rights to a partner’s pension as part of their divorce.
“This is particularly true for older women, with one in four divorces occurring after the age of 50,” she said.
The gender pay gap:
L&G looked at the size of pension pots of more than 37,000 people in the UK who retired in 2020.
Of these, the average size of a man’s pension pot at retirement is £21,000 compared to £10,000 for a woman.
Stuart Murphy, Defined Contribution at Legal & General, said the COVID-19 pandemic had highlighted that problems gender inequality is can have in the workplace.
He said: “Events over the last year have shone a spotlight on those who juggle day jobs with keeping a household running.
“Changing social and workplace attitudes should help begin to level the playing field in terms of responsibilities, helped by the increasing acceptance of more flexible working patterns.”
Murphy said the gender pay and pension gap is a complex issue that will take time to solve.
“We need to see increased support from the government and employers in levelling the playing field by looking at issues such as lowering the eligibility age and raising the minimum contributions for auto-enrolment, as well as addressing the pay gap for part time employees,” he said.
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