For the next 35 days women in the UK will, in effect, earn nothing compared to their male counterparts, research into income and retirement savings has found.

According to research by The Fawcett Society, published earlier this year, women in full-time employment are still paid an average of 13.9 per cent less than their male colleagues. As a result, if a pot of money equal to the average annual salary of women was paid out to at the same rate as the average paid men, women’s income would have run out yesterday.

Due to the income gap, the Fawcett Society has noted that women save around 40 per cent less into their pension pots than men. Women are found to save less across the savings spectrum and are less likely to understand pensions products than men. Seventy six per cent of women are unaware how much they need for a comfortable retirement.

Campaigners have said that the current pay gap, and so the pensions gap, will take 60 years to close at the current rate of progress.

Marking Equal Pay Day, yesterday, Royal London pensions specialist Fiona Tait said: “Crucially, so long as women earn less, they will most likely continue to save less for their retirement, particularly as workplace pension contributions are usually based on a percentage of salary. This results in a 'double whammy' of lower employer contributions and an increased financial pressure to make their own pension contributions.

“The result is that we see women’s retirement income mirror their earned income with women finding that their pension pot also effectively runs out sooner than their male colleagues, so they are more likely to be dependent on just the state pension for the latter years of their lives.

In addition, research by Royal London, Pensions Through The Ages, also indicated that almost one in five women aged 35 to 44 said that they expect their financial situation in retirement to be unmanageable.

Fifty per cent of these women confirmed that they would seek financial advice on how to manage their income in the future.

“Taking advice, and sooner rather than later, could make a real difference in retirement and encourage more women to make the most of their employers’ pension arrangements” Tait added.

Aegon UK head of pensions Kate Smith, commented: “If you’re a woman in the UK, today marks the point in the year when you stop earning relative to men. The gender pay gap means that for the next 35 working days you’re effectively not earning any money. As shocking as this is, the impact doesn’t just affect take home pay.

“A lower overall salary also means personal pension payments and employer contributions are lower, because typically this is calculated based on income. Set against a retirement savings journey disrupted by maternity leave, this puts women on the back foot from the day they start working, and means women save an average of £1,020 less each year compared to their male counterparts.

“As if this wasn’t enough, reforms to equalise both the age at which state pension can be accessed and the number of qualifying years of National Insurance contributions, means women are being hit with a double whammy when it comes to retirement saving. It’s absolutely crucial that employers across the UK take this inequality seriously, and government carefully considers these imbalances when setting pension policy.”

Share Story: