Men have accumulated on average £139,451 more than women in pensions savings when they reach 64 with the gender pay gap most pronounced for women from their 50’s onwards, according to new analysis.
Men aged 64 today have accumulated £439,581 in pension savings, on average – £139,451 more than their female counterparts, according to new analysis.
The PensionBee analysis says much of this accumulation happens after workers turn 50, when men typically save over £90,000 more into their pensions than women during this period.
This is because men tend to participate in more hours of paid work per week, at a higher median hourly rate, throughout their working lives than women, which has a compounding effect in later life, says PensionBee. As a result, women aged 50 to 64 experience an average hourly pay gap of 25%, with part-time work being undervalued compared to full-time work. In addition, men aged 50 to 64 work nine extra paid hours a week compared to women of the same age.
The analysis shows the difference in paid working hours first presents itself in a woman’s late 20s to early 30s, the time when mothers typically tend to have their first child. This difference peaks again in later life, where a quarter of older female workers have caring responsibilities (for example, elderly parents or grandchildren), double the proportion of older male workers. Unpaid carers report difficulty participating in paid work, in addition to their caring responsibilities, re-entering the workforce after time out and achieving career progression. But despite this, the prohibitive cost of private care, along with the negative reputation of state provision, has led to many people taking on caring responsibility themselves, says the report.
PensionBee found that more than a third (36%) of unpaid carers have cut down or left work due to their care responsibilities and more than two in five (41%) balance full-time paid work with unpaid care work. Most employed women (62%) work part time, compared to only 24% of employed men. PensionBee research also shows that the vast majority of savers (85%) believe that unpaid care work should be equally shared between genders to avoid unpaid caring responsibilities having a detrimental effect on a person’s ability to save for retirement and meet their own care needs. Women are more likely to strongly agree with this view (41%) compared to men (33%).
PensionBee calculates that if caring responsibilities were shared between genders, more women would be able to stay in full-time work throughout their careers (including after the age of 50), resulting in a women’s overall pension pot size increasing by more than £106,000.
Romi Savova, CEO of PensionBee, said: “Women are most likely to take on care responsibilities throughout their lives, and to participate less in paid work as a result, leading to lower incomes and lower retirement savings. Whilst there is a role for individuals to play, it is not fair for them to shoulder the full burden. More supportive employer policies, a culture of gender equality, and a more transparent defined contribution pension system can help empower consumers to save for a happy retirement.
“With increasing life expectancies meaning more and more older workers will need to take on caring responsibilities, particularly for elderly parents, urgent action is needed to prevent older workers from needing to stay in the workforce for longer, to be able to save enough to support their own retirement and care needs.”