The triple effect of lower salary, career breaks and lower contribution rates cannot be ignored any longer - it's time to fight back
This time it’s the turn of younger women to be hit with a huge dose of unfairness.
A study from insurer Zurich shows that last year men under the age of 35 received an average £217 more in employer pension contributions than females of the same age.
And between 2013 and 2016, men received pension contributions of 7.8% of their salary each year while women got 7%.
This difference comes on top of the gender pay gap and means men got a £3,495 boost to pension savings from their employers, compared to £2,489 for women over the four-year period.
If this continues it would amount to a £46,689 shortfall in employer contributions for a woman over her working life.
Time to fight back
Despite supposed equality in the workplace, women still earn less than men. It is illegal for a man to earn more than a woman who is doing the same job but many still do.
According to the Fawcett Society the current pay gap for full-time workers is 13.9%.
Earning lower salaries means women get less towards their pension from employers as contributions are based on a percentage of pay.
And because they earn less, women have less spare cash to put into retirement savings themselves.
Caring responsibilities are a major cause of the inequality. Women typically take on the lion’s share of caring, taking career breaks to look after children and parents. This can mean they have to stop saving for retirement or never get started on it.
And many women have little choice than to accept lower paid work as that’s the only option that offers more flexible hours to fit around the needs of the family.
On top of this, the Government is equalising men and women’s state pension age so women must wait longer to access their state pension.
Rose St Louis, of Zurich Insurance, said: “The impact of the gender pay gap on women’s pension pots is no secret, but this difference in the contributions that they receive from their employer presents a serious, and growing, problem.
“The triple effect of smaller salaries, career breaks and lower contribution rates needs to be addressed. We can’t ignore a £47,000 shortfall.
“Workplace engagement and guidance has a central role to play in helping women make the most of their saving potential while they are working full time. But it is crucial that greater focus is placed on ensuring that this gap is not allowed to grow any further.”
Women and pension savings
- It’s vital women take control of their financial future to ensure they get the best state pension and have private/workplace savings to fall back on too.
- Start saving as soon as you can – when you start working is the ideal time. The younger you start saving into a pension, the less you will need to put away each month. Pensions are a slow burn and putting money away each month over a lifetime of work will help you to build up a decent retirement pot.
- Save the most you can afford. Remember you are putting something away while you earn to give you an income during retirement.
- If you and your boss are just putting in the minimum legal amount via auto enrolment each month, ask if your employer will match or at least up their contribution if you raise yours.
- If you take a career break to look after children, try and keep up your pension savings, even at a reduced amount.
- Keep an eye on pension savings and check to ensure they are on track to provide the income you want for your retirement.
- Use your ISA allowance. A mix of pension savings and ISAs will give you flexibility. ISAs also help to keep tax issues simple.
- Zurich has launched a series of tools to help people plan and manage their financial wellbeing at zurich.co.uk/futureyou/pensions
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