Gender pensions gap hits 56% at retirement

The gender pensions gap stands at 56 per cent at retirement, according to analysis of approximately 4 million Legal & General (L&G) pension scheme members.

This analysis from L&G showed that the average pension pot of a woman at retirement of £10,000 was less than half the value of the average man’s pension pot, which was £21,000.

L&G said the initial gap of 17 per cent remained largely unchanged until men and women reached their thirties, but doubled to 34 per cent by the time they were in their forties and increased further to 51 per cent among those in their fifties, before hitting its highest level at retirement.

The firm noted that the gap was prevalent even in industries dominated by women, with the senior care sector, where women made up 85 per cent of pension scheme members, showing the average woman’s pension to be 47 per cent smaller than the men’s equivalent.

L&G asserted that the disparity had an effect on the choices made at retirement, noting that 92 per cent of women chose to take their pension in cash compared to 86 per cent of men, while only 7 per cent of women considered a drawdown compared to 12 per cent of men.

Due to the findings of the research, the firm said it would carry out annual reviews into whether the gender pensions gap was changing and added that extending automatic enrolment to those earning less than £10,000 per year could be a good first step in narrowing the gap.

Legal & General Investment Management (LGIM) co-head of defined contribution (DC), Rita Butler-Jones, commented: “The decision to take a career break to raise a family has a clear impact, though there a number of other factors at play here including lower pay relative to male peers at all stages of a woman’s career, a lack of pension contributions when she is away from the workplace, and the potential impact that raising a family has on a woman’s career progression.

“Women are also more likely to face financial struggles following a divorce from their partner and are significantly more likely to waive their rights to a partner’s pension as part of their divorce. This is particularly true for older women, with one in four divorces occurring after the age of 50.”

LGIM co-head of DC, Stuart Murphy, said: “Events over the last year have also shone a spotlight on those who juggle day jobs with keeping a household running. Changing social and workplace attitudes should help begin to level the playing field in terms of responsibilities, helped by the increasing acceptance of more flexible working patterns.

“The gender pay and pension gap is a complex issue that will take time to solve. We need to see increased support from the state and employers in levelling the playing field by looking at issues such as lowering the eligibility age and raising the minimum contributions for auto-enrolment, as well as addressing the pay gap for part time employees.”

    Share Story:

Recent Stories




DC master trusts
Pensions Age editor Laura Blows, editor of Pensions Age look at developments within the DC master trust market with Paul Leandro, partner at Barnett Waddingham, and Mark Futcher, partner and head of DC at Barnett Waddingham.
Investing in Asia
Pensions Age editor, Laura Blows, discusses with CRUX Asset Management fund manager, Ewan Markson-Brown, the opportunities for investing in Asia and CRUX Asset Management's fund launch to help with this

Advertisement Advertisement