Gender pensions gap persists depite women upping pension contributions

The gender pensions gap remains a “core issue” despite women being more focused on pension saving than men, with men in the UK receiving 37 per cent more in retirement income than women, according to analysis from More2life.

Whilst the gender pensions gap narrowed by £40 per month in 2021, the research showed that the average man aged over 55 has an annual retirement income of £19,536, compared to just £14,208 for women, meaning that women could miss out on an additional £170,496.

The current gender gap represents a £444 monthly difference in retirement, which More2Life stressed could have a “significant impact” on an individual’s lifestyle, particularly amid the cost-of-living crisis.

The evidence also suggested that the trend was more prominent amongst older savers and was not reduced by cohabitation, as men aged over 75 and living with their partners receiving retirement incomes of almost £10,000 more per year than women.

Despite the continued gender gap, women were found to be contributing a higher portion of their monthly income to their pension than men, with women saving an average of 5.1 per cent of their earnings compared to men’s 4.9 per cent.

However, lower salaries mean that women still contribute less to their pension in absolute value, with women contributing £2,360 annually compared to £3,169 for men.

In addition to this, the research found that women receive or expect to receive far less income from savings accrued across various types of pension.

From a defined benefit (DB) scheme, women receive 29 per cent compared to men’s 49 per cent, while in annuities they receive 7 per cent compared to 18 per cent, and in pension pot drawdowns only 20 per cent compared to 23 per cent for men.

More2life also suggested that the pensions gap enables men to not only save more during their working lives but during retirement too, as difference in personal savings stands at 34 per cent for women compared to 46 per cent.

Commenting on the findings, More2life director of manufacturing and adviser proposition, Les Pick, stated that while it is good news that the gender pensions gap narrowed slightly, this was "barely enough" to make an impact, stressing that "we still have a long way to go before we reach true pensions equality".

He continued: "It is also particularly frustrating that despite being more focused on putting money aside for the future, women find themselves worse off in retirement.

“The disparity often leaves women in search of ways they can augment their retirement income, especially as more and more over-55s are looking to gift funds to loved ones to help them on the property ladder, or to deal with rising costs of living.

“To help close this gap and ensure that all retirees and over-55s have the later life income they deserve, advisers and consumer champions must work to increase awareness of the various financial options available to help.

“Improved financial understanding and education on how later life lending can augment income, create more financial flexibility, and help mitigate the effect of the gender pensions gap is essential for the UK’s financial future.”

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