Women less engaged with their pension than men – tackling the gender pension gap

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Even in 2021, barely a month goes by when you don’t read a news story about gender inequality.  Only last year, BBC presenter Samira Ahmed won her court case against the broadcaster claiming the corporation underpaid her by £700,000 for hosting a similar show to that of male colleague Jeremy Vine.

Two years earlier, producers of the hit Netflix show The Crown confirmed British actress Claire Foy was paid £200,000 less than for her performance as Queen Elizabeth II than co-star Matt Smith, who played Prince Philip.

Despite great strides made in recent decades, financial equality remains an issue – particularly when it comes to pensions. Now, a new report has found that women are less likely to be engaged with their pension than men. They are also less likely to know where their pension is invested, and what the charges are.

Read on to find out more about why it’s vital for women to take more control of their retirement planning.

Study reveals low pension engagement among women

Recent research from the Financial Conduct Authority (FCA) has revealed poor levels of engagement among savers, particularly among women.

Figures from the FCA’s comprehensive Financial Lives survey show that a high proportion of people are not taking an interest in pension matters, such as where their pension is invested, how much it is worth, and what the charges are.

This seems to be a particular problem for women who are, overall, less engaged than men. While the research found that most people do read their annual pension statement, 14% of women don’t, compared to just 6% of men.

Other issues, such as charges or investment choices, show much lower levels of engagement, particularly among women.

The FCA data on engagement with defined contribution pensions

All these factors could be contributing to the “gender pension gap”. According to a 2020 report, the gap between the pension earnings of women and men was 40.3% in 2018/19. This represents an average difference in pension income by gender of about £7,500 a year.

Overall, the gender pension gap has remained stubbornly constant at around 40% for the last five years. So, what has caused this?

From pay gaps to State Pension inequality – the causes of the gender pension gap

There are several key reasons why the gender pension gap exists.

The gender pay gap

If an employer pays a woman less than a man, their contributions into pension will be less. If a man earns 7.4% more than a female colleague, then a percentage contribution to their pension fund will be greater as it is based on a higher amount.

It’s perhaps no surprise therefore that the Financial Times reports that the average pension for women is £106,000 less than for men.

The impact of women taking breaks from employment

If women are taking months or years out of employment to look after family, it follows that they will also lose some pension contributions over that period.

Inequality in the average level of the State Pension

Despite the efforts of causes like Women Against the State Pension Inequality (WASPI), inequality in the average level of State Pension awarded to men and women is not projected to be fully addressed until about 2041 (but only for people reaching State Pension Age from that year).

Tackling the gender pension gap

According to a Chartered Insurance Institute (CII) study at the end of 2018, by the time a woman is aged 65 to 69, her average pension wealth is £35,700 – roughly a fifth of that of a man her age.

While government intervention may be required to tackle some of the root causes of the gender pension gap, there are other initiatives in place designed to tackle this inequality.

For example, the People’s Pension – the trust that delivers a workplace pension to more than four million mostly low- and medium-income savers – is calling for a cut to the earnings trigger to the primary National Insurance threshold.

This would bring in half a million new pension savers, three-quarters of whom would be women. They also want to extend the system of State Pension credits that could see women build up State Pension eligibility while caring for younger children.

In addition, the CII has launched the Insuring Women’s Futures initiative. Working with the personal finance and insurance sector, the government, and society as a whole, the aim is to help women become more financially robust.

Get in touch

If you’d like to know more about your pension savings, and how you can build up your retirement fund, please get in touch. Email enquiries@blackswanfp.co.uk or contact your adviser on 020 3828 8100.

Please note

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.


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