New figures paint a stark picture of the gender pension gap, with women facing a huge disparity in retirement income compared to men.
Women would have to work for an additional 19 years to close the current gender pension gap, according to new data.
A report released by NOW: Pensions and the Pensions Policy Institute (PPI) has revealed a huge disparity in retirement savings between men and women in the UK, with women retiring with an average of £69,000 in pension savings, compared to £205,000 for men.
To close this gap and achieve parity with their male counterparts, women would need to work and save for an additional 19 years on average, the report stated, based on starting pension saving at the minimum age limit of 22 years for auto-enrolment.
One of the key factors contributing to this gap is the career interruptions women often face due to childcare responsibilities, resulting in an average of 10 years away from the workforce.
This gap translates to a loss of approximately £39,000 in pension savings, according to the report, and is exacerbated by significant childcare costs. Average annual nursery fees for children under two amount to £14,800 nationwide and are even higher in London.
Lizzy Holliday, director of policy and public affairs at NOW: Pensions, emphasised the need for bolder policy actions to tackle the “vast” gender pensions gap.
“Some of the solutions are broader than traditional pension policy,” Holliday said. “Childcare and gender pay gap issues must be given the urgent attention they require. But setting out the roadmap for the future of auto-enrolment, including tackling the difficult issue of adequacy in retirement – which affects women disproportionately given lower pension wealth – should be front and centre of next steps.”
Lauren Wilkinson, senior policy researcher at the PPI, added that there was “a lack of clear consensus in terms of definition, magnitude and potential solutions” to the gender pension gap.
She said: “While there are some pensions policy options that could be introduced to potentially mitigate the gender pension gap, it’s unlikely to significantly reduce without changes in labour market conditions and gendered divisions of domestic labour.”
NOW: Pensions set out five policy goals to help address the gap. As well as changes to the auto-enrolment regime, the organisation called for a family carer’s top-up to address career interruptions through childcare and caring for relatives. It also called for measures to make childcare more affordable, and to educate women on options for sharing pensions in a divorce settlement.
Reducing or removing the lower earnings limit for auto-enrolment eligibility would also have a positive impact, NOW: Pensions said. Currently, an estimated 100,000 more women than men are ineligible for auto-enrolment as they earn less than £10,000 a year, according to the report.