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Women could end up £72,500 worse off than men at retirement

written by Bella Palmer
retirement

A male worker could save £161,999, while a woman could potentially end up with £89,449 in case of part-time work, according to Nest

Women earning an average UK salary could end up more than £70,000 worse off than men at retirement, new figures suggest.

The average woman working full-time in the UK could have a £41,000 gender pension gap at retirement, according to modelling by workplace pension scheme Nest, but when part-time work is included, the gap widens to around £72,500.

Nest calculated that a male pension saver working full-time could have £178,871 saved by retirement, while a woman could amass £137,863.

The calculation, based on average UK wages, made several assumptions, including about investment growth and that someone would start saving aged 22 and retire at 68.

When part-time work was taken into account, the modelling found a male worker could potentially end up with £161,999 while a woman could save £89,449.

Many women spend much of their lives working part-time to juggle caring responsibilities for children and other family members.

Covid-19 has had a significant impact on people's financial situation and their outlook.

When surveyed in June, women saving with Nest were more likely than men to say they were only just about managing to make ends meet financially - at 34 per cent versus 25 per cent.

Nest said there are some small steps pension savers can take to help their pots grow.

It suggested that workers should not wait until they are 22 to be automatically enrolled into a workplace pension. Workers may find they can opt into a workplace pension from 18 and benefit from employer contributions and tax relief, it said.

It calculated that saving from 18 rather than waiting to be auto-enrolled at 22 could add as much as £12,500 to someone's final pension pot.

Even adding as little as £2.50 a week extra could potentially grow it by £13,600 by retirement, Nest said.

It can also pay to know where you stand with your pension. During parental leave, many workers are entitled to full employer pension contributions based on their usual salary rather than statutory pay, Nest added.

It said that based on the average salary, steady employer contributions during two 12-month maternity breaks could mean an extra £1,700 in women's pots.

Nest's director of strategy and corporate affairs, Zoe Alexander, said: Women face systemic challenges in saving as much as men do for their retirement - these begin at the start of their working life and have a ripple effect throughout their life as they juggle conflicting priorities, lasting well into retirement.

It looks like the ongoing impact of Covid-19 could also disproportionately affect women and may further undermine their pension savings potential, Alexander said.

He said, in times of financial instability, where every penny counts, pension contributions can seem like a luxury. But starting early and continuing pension contributions, if you possibly can, is the best way to futureproof your financial wellbeing in retirement.

Important:

This article is for information purposes only.

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