Know the data behind the gender pension gap and #StartTalkingPensions
For International Women’s Day (IWD) 2023, Scottish Widows used their 18 years of expertise and research to explore the data behind the gender pension gap and get people to #StartTalkingPensions. The Gender Pension Gap is the difference between the pension pot of men and women when they retire.
Women's economic advancement and financial security across the world are key
Research from UK's Scottish Widows, the insurance arm of Lloyds Banking Group, shows women on average would have to work many more years to retire with the same pension as men - a key issue for its almost six million customers, and further women across the UK, young and old. So for IWD 2023, Scottish Widows highlighted the gender pension gap by raising awareness that women retire with less funds than men by campaigning for change, and raising awareness at scale.
What is the gender pension gap still so big?
Gender imbalances in pay, working patterns and time out of work for childcare and caring responsibilities are the key drivers of the pension gap.
While there may have been a slight improvement in the outlook for young women over the years, the difference remains stark.
In the UK, the average 25 year old woman is on track to retire with £100,000 less than a man. Converted into working years, she would have to work an additional 16 years to age 81 just to reach the same level of pension as a man.
The structural imbalances in the labour market, that impacted generations before, still persist today, compounded by the gender pay gap.
Chart 1 - Today, on average women are retiring with £123,000 less than men.
Chart 2 - On average a 25-year-old woman today will retire with £100,000 less than a man.
Chart 3 - Women are more likely than men to take on roles that affect their ability to retire with the same amount as men.
Three steps to help you take on the gender pension gap
There are, however, specific steps women can take to minimise the financial impact on their UK pension. Understanding the key drivers behind the gap and the steps you can take can help you minimise the financial impact on your pension.
1. Get a head start in your 20s
This can help off-set any drop in income later, if you choose to take a career break or work part-time. See the impact saving younger can have.
2. Take advantage of your workplace pension
This is a tax efficient way to save for your future. Employers must now offer a workplace pension so find out if you can join. Every time you pay in, the Government and your employer pays in too. If you’ve had more than one pension you might have other pensions so could be worth tracking these down.
3. Things we forget to talk about
Lifestyle factors that contribute to the Gender Pension Gap such as sharing the financial impact of career breaks, caring responsibilities. Pensions during divorce and potentially some settlement and even the benefits of joint annuities. These are just some of the important things we forget to talk about but we all should as they can have a big impact on retirement plans.
Scottish Widows is taking on the Gender Pension Gap
To help close the gap Scottish Widows works with organisations across industry, the education sector and the Government. They are committed to highlighting the issue, providing support and guidance as well as campaigning for pension reforms that could make it easier for women to save for retirement.
Experts, Alison Nicolson and Jane Clark-Hutchinson Co-Heads of Client Relationships and Sponsors of Inclusion and Equality, explain the main causes behind the Gender Pension Gap. Scottish Widow's flagship annual Women & Retirement Report is shared industry-wide, giving a thorough analysis of women’s preparedness for retirement. Read the Gender Pay Gap Q&A.
Recommendations from Scottish Widows
- Tackle causes of the Gender Pension Gap
- Support ethnic minorities in their different approaches to funding their retirement
- Encourage better financial understanding across all demographics
- Improve pension guidance and education to young women
- Remove the auto-enrollment contribution threshold
- Improve knowledge on annuities and joint annuities in particular
PARTNER CONTENT: Developed in collaboration to support IWD's Women & Work Misson.
This article is not intended to be relied upon by the reader in the making of any financial decisions, and does not constitute financial or professional advice. You should seek your own professional advice.