Average pension for women half that of average man at retirement

Women’s pensions at retirement are half the size of men’s regardless of the sector they work in, analysis from Legal & General has revealed.

Its analysis of more than 4.5 million savers found that, on average, women’s pensions at retirement were £12,000 compared to £26,000 for men.

Legal & General pointed out that, considering women are likely to live four years longer than men, this issue deepens as they need to have saved around 5-7 per cent more at retirement age.

The study by Legal & General found the gender pay gap exists regardless of average pay across different sectors, and ranges from a 59 per cent in the healthcare industry, to 13 per cent in courier services.

The sectors found to have the largest pensions gaps included the healthcare sector (59 per cent gap), construction (51 per cent), real estate/property development (48 per cent), pharmaceutical (46 per cent), aerospace, defence, and government services (46 per cent), and senior care (45 per cent). Of these six sectors, three are key industries for female employment – healthcare, pharmaceuticals, and senior care.

Legal & General co-head of defined contribution, Rita Butler-Jones, said: “It is striking that some of the sectors where we see the highest gender pensions gaps - such as senior care, healthcare and pharmaceuticals – are also among the top sectors for female employment. This demonstrates the extent of the crisis facing many women as they approach retirement, even in careers where they make up the majority of the workforce.

“There is therefore a real need for providers, schemes and government to work together to understand and tackle both the sector-specific and structural barriers which women face in saving for their future.”

Legal & General pointed out that there are many reasons for the gender pensions gap, ranging from women holding fewer senior positions and being paid less, resulting in lower pensions contributions, to the fact that they are more likely to take career breaks due to caring responsibilities.

Another potential driver pointed out by the company was the gender confidence gap when it came to managing pension pots, as 28 per cent of women said they had confidence in their ability to make decisions about their pension compared to 48 per cent of men.

This lack of confidence extends to other financial decisions, with women less likely than men to feel confident managing their investments (22 per of women versus 41 per cent of men), and their savings (56 per cent of women versus 67 per cent of men).

Legal & General commercial director of workplace savings, Katherine Photiou, commented: “We looked at data from over four million workplace members and found that every industry in the UK has a significant gender pensions gap. This is a serious issue in itself, but it deepens when life expectancy is taken into consideration too.

“We’ve all heard about the gender pay gap, but very few discuss the gender pensions gap, despite the fact so many women experience it.

“This shows more needs to be done to boost engagement with pensions, particularly with those who feel less confident, and who may need help on where to start when it comes to making financial decisions.

“Millions of people would benefit from a wider range of support services to make more informed decisions about their savings and investments. But this support needs to be personalised to achieve any real shift, and this is where government and industry need to work together.

“Pensions can seem complicated but they're just a regular savings plan with some tax perks. We need to demystify pensions and get back to basics.”

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