According to a report carried out by the Pensions Policy Institute (PPI), women have barely half the occupational pension savings of men. The study carried out revealed that on average, women have £7,500 in savings in defined contribution schemes, compared to £14,500 for men.
In defined benefit schemes (or final salary schemes) men typically have £62,900 in savings compared to £32,000 for women. Other groups such as ethnic minority workers, carers, people with disabilities, and the self-employed were shown to have lower pension savings as well.
Why are there inequalities?
As you will probably be aware, there is still a gender pay gap between women and men in the UK, with the latest figures suggesting that women earn on average 20% less than men. Although some action is being taken in this area – companies with more than 250 employees will be forced to reveal their gender pay gap by 2018 – this inequality in pay is likely to be a factor in the disparities found in this report.
Not only this, but previous research conducted by the government found that women are more likely to opt out of auto-enrolment schemes than men. This may be because a larger proportion of women tend to work part-time.
To build up to a good pension pot, workers need to be in a well-paid and secure job. As women are still more likely to take time off work to have and raise a family than men, this could possibly be a factor in why their pension savings are not as high as men. The same could be said for the self-employed, who were shown in the report to have 4.8 per cent less in defined contribution savings than average pensioners.
Preparing for this
With these figures in mind, the best way to tackle inequalities in pensions is to start saving as soon as you possibly can. This should now be much easier to do, as by 2018 all businesses will offer a workplace pension scheme and automatically enrol their eligible workers in it.
When you’re enrolled onto a workplace pension, you pay in a certain amount of what you earn every month and the company will top this up, along with a contribution by the government in the form of tax relief.
You’re eligible for a workplace pension as soon as you reach the age of 22, work in the UK and earn more than £10,000 a year. Even if you only put in a little bit each month, the earlier you start contributing to a pension fund, the more time you’ll have for the investment to grow.
If you’re self-employed, you don’t have to just rely on the State Pension, you could set up a stakeholder pension, personal pension or self-invested personal pension. Try to give yourself a good length of time to build up a retirement fund, as you won’t have an employer adding to the pot.