UK women experience 11% pensions gap with men UK women experience 11% pensions gap with men

UK women experience 11% pensions gap with men
13 Jul 2018

Young British women who pay into pension schemes in line with UK government-specified auto-enrolment contributions will still see their final fund worth nearly 11% less than that of their male colleagues, a new study has concluded.

A report into women and pensions from investment firm Fidelity International calculates that a man currently aged between 25 and 34 is likely to have a pot worth £142,836 (US$189,305) when he reaches the state pension age of 68. But a woman is likely to have amassed only £126,874 (US$168,150) by the same age.

Fidelity blames the situation on the ‘motherhood’ and ‘good daughter’ penalties, whereby women take time out of employment at each end of their working life. This means they are likely to pay less into their pensions. The problem is further compounded by the fact that women are likely to earn less than men during the years they work.

As a result, women need to invest an extra 1% of their income to make up the difference, the report suggests.

Maike Currie, investment director at Fidelity International, said that financial inequality was one of the greatest challenges faced by society today as people live longer, earn less and are more likely to take career breaks or work part-time.

"To unlock the financial power of women, we need to address the personal, professional and policy barriers stopping women from investing,” she said. “On a personal level, women still shy away from risk and prefer the perceived safe haven status of cash."

Moira O’Neill, head of personal finance at Interactive Investor, told Moneywise that even people who are not working can pay up to £3,600 (US$4,761) a year into a pension and obtain 20% tax relief. This means their initial investment will only cost them £2,880 (US$3,809).

"As everyone has their own personal allowance, it makes far more sense to have both partners in a couple generating some income in retirement rather than relying on just one," she added.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

 

Young British women who pay into pension schemes in line with UK government-specified auto-enrolment contributions will still see their final fund worth nearly 11% less than that of their male colleagues, a new study has concluded.

A report into women and pensions from investment firm Fidelity International calculates that a man currently aged between 25 and 34 is likely to have a pot worth £142,836 (US$189,305) when he reaches the state pension age of 68. But a woman is likely to have amassed only £126,874 (US$168,150) by the same age.

Fidelity blames the situation on the ‘motherhood’ and ‘good daughter’ penalties, whereby women take time out of employment at each end of their working life. This means they are likely to pay less into their pensions. The problem is further compounded by the fact that women are likely to earn less than men during the years they work.

As a result, women need to invest an extra 1% of their income to make up the difference, the report suggests.

Maike Currie, investment director at Fidelity International, said that financial inequality was one of the greatest challenges faced by society today as people live longer, earn less and are more likely to take career breaks or work part-time.

"To unlock the financial power of women, we need to address the personal, professional and policy barriers stopping women from investing,” she said. “On a personal level, women still shy away from risk and prefer the perceived safe haven status of cash."

Moira O’Neill, head of personal finance at Interactive Investor, told Moneywise that even people who are not working can pay up to £3,600 (US$4,761) a year into a pension and obtain 20% tax relief. This means their initial investment will only cost them £2,880 (US$3,809).

"As everyone has their own personal allowance, it makes far more sense to have both partners in a couple generating some income in retirement rather than relying on just one," she added.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

 

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