IWD23: Gender pension gap widens with age

Written by Lori Campbell on 8th Mar 2023

The gender pension gap widens with age, with pension pots of women just over HALF the size of men at retirement age, new data reveals.

Research from Aviva found the gender pension gap begins to widen significantly from the age of 35, and there are still significant gaps between how much women pay into their pension compared to men.

Based on the workplace pension data for just over five million pension plans, the gap between women’s and men’s pension contributions for 35-39-year-olds is 21 per cent, up on the 18 per cent gap last year. It then increases to 24 per cent for 40-44-year-olds and 27 per cent for 45-49-year-olds before stretching to 32 per cent for 50-54-year-olds.

The amount paid in pension contributions has a big impact on retirement income, and the difference between women’s and men’s contribution rates is stark.

The gap between women and men’s pension contributions:

Age group January 2022 January 2023
20-24 13% 15%
25-29  16% 15%
30-34 15% 17%
35-39 18% 21%
40-44 23% 24%
45-49 29% 27%
50-54 35% 32%
55-59 40% 35%
60-64  45% 38%
65+ 49% 39%

Source: Aviva

Michele Golunska, Managing Director for Wealth and Advice at Aviva said: “This suggests a clear line in the sand around the age that women are often making milestone career and childcare decisions and considering opting to work part-time.

“Pension contributions are unlikely to be a deciding factor when considering whether to work part-time, but what is important is that the long-term impact on a pension is understood when making that decision. This is crucial to good financial planning.

“Some might consider upping their pension contributions, but this would have to be carefully balanced against disposable income. An option that some parents may consider is sharing the caring responsibilities to help spread the long-term impact on pension savings.”

Aviva’s Working Lives Report, published in June 2022, found that women are significantly more likely to say that their workplace pension will not provide enough for them to have a comfortable retirement (40 per cent of women compared with 28 per cent of men). It also found that part-time workers are more likely to say that they will not be able to retire comfortably on their workplace pension (46 per cent of part-time workers versus 33 per cent of full-time workers).

Download our free Good Guide to Financial Wellbeing for Women

10 tips on how to reduce your pension gap:

  1. Use online retirement tools to help understand if you are on track for a financially comfortable
  2. If you are working part-time and automatically enrolled into a workplace pension scheme, consider
    increasing your monthly contributions, if it is affordable.
  3. If you earn less than £10,000 per year, speak to your employer about your options for joining your
    company pension scheme.
  4. If you are thinking about reducing your working hours to help balance family life, consider whether it is better for you or your partner to work part-time. As part of this, look at which of you gets higher employer pension contributions.
  5. Start saving into a pension as early as possible as this allows a small contribution to build up over time.
  6. If you are going through a divorce, keep pensions front of mind when splitting assets. Aviva found one in seven people (15 per cent) did not realise their pension could be impacted by getting divorced and a third (34 per cent) made no claim on their former partner’s pension when they divorced.
  7. Check your National Insurance record to see if you will get the full State Pension amount when you retire. You need a total of 35 years of National Insurance contributions, or, in some cases, you can apply for credits. If it looks like you will be short, you might have the option to pay to fill in the gaps.
  8. Apply for Child Benefit, even if your overall household income means you need to pay it back through a high-income child benefit charge. If you are not working while looking after a child, you get state pension credits automatically until your youngest child is 12 years old if you are claiming Child Benefit.
  9. Talk to your employer about the policies they offer. Employees who might only receive statutory maternity pay for part of their parental leave, might be able to maintain full pension contributions.
  10. Seek guidance or professional advice: You can get impartial guidance on money, pensions, or debt from the government’s free MoneyHelper service. If you want personal financial advice, find a professional financial adviser. For those who are over 50 and considering their pension options, the government-backed Pension Wise service from MoneyHelper can provide free guidance.

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