Pensions: Women risk a ‘significant shortfall’ of £143,000 in retirement – how to avoid

Gender pension gap: Why women are less secure in retirement

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Women typically have longer life expectancies meaning their pension pots need to stretch further – but lower pay, smaller pay rises, and career breaks all combine to create a “significant shortfall,” an expert warns. Express.co.uk spoke with Maike Currie, investment director at Fidelity International about ways women can combat this gender gap.

She said “Closing the gender pay rise gap is – sadly – not something that will happen overnight. It’s a balancing act between employers, employees and policymakers, and it’s important to remember that there won’t be a ‘one-size-fits-all’ solution.”

Research from Fidelity international shows higher and more frequent pay rises for men compared to women could result in a pensions gap of £142,603 between the sexes.

They found around 50 percent of men have asked for a pay rise at some stage in their career, with 25 percent making more than one request within their working lifetime.

In contrast, just 37 percent of women have ever asked for a pay rise – with only 12 percent making subsequent requests.

If their request is successful, men typically receive an average of £733 more than women for each pay rise they are granted (£2,017 vs. £1,284).

Ms Currie continued: “Female employees need to feel they are in a safe and supported working environment, which allows them to openly communicate with their employees and discuss options that protect both their careers and caring responsibilities. Equally, employers need to advocate for promotions and personal growth at work.

“Keeping an eye on the market, companies within your sector and those working at your job level to get an idea of their track record and benefit structures is a good way to inform the conversation and help to instil confidence in your business case.

“But it’s not just about securing more take home pay. Other benefits such as additional pension contributions and childcare support are equally valuable and will see your overall finances boosted in the long-term.

“In minimising the gender pay rise gap, the positive impact to women’s pensions savings, over time, can also make a real difference.

“We’ve all seen the disproportionate impact the pandemic has had on women’s finances.

“It’s critical we don’t allow for the last two years to widen the gaps in gender pay any further and instead concentrate on empowering women to think about their financial positions today and well into the future.”

A man on an average salary of £37,817 (as recorded by the Office of National Statistics – ONS) who receives a pay rise every five years throughout his career, could see his salary grow to £75,748 by retirement age.

In comparison, a woman’s salary starting on £25,066 would only grow to £49,683 if she received a pay rise of £1,284 every five years.

Fidelity also analysed how the gender pay gap widens when women take a break from their career.

A woman taking a five-year career break during her 30s will reach retirement with a pot of £217,610.

This is almost £60,000 less than a woman who stayed in full time employment throughout her career.

The gender gap grows significantly should a woman take a five-year career break to an eye-watering £201,396, Fidelity’s research showed.

Ms Currie continued: “While most women have heard of the gender pay and gender pensions gaps, many have not considered the gender pay rise gap and its effect on their income and pension contributions now and the impact on their retirement pot.

“This is why the subject of pay rises shouldn’t be a taboo.

“If you get paid less, you put less in your pension pot, let’s talk about this and address the glaring gaps today.”

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