Career breaks hit pension saving
Women accumulate on average £56,000 in their pension funds by age 50 compared to £112,000 saved by men, research by Aegon has found.
The data showed that the gender gap rises with age, as women aged 50, who want to match their male counterpart’s pension at retirement, would need to pay an extra £360 into their pension pots each month.
The study, part of Aegon’s Readiness research, was carried out with a sample of 2000 participants aged 18 to 65.
According to Aegon, a number of factors including gender pay gap and time spent out of employment to raise children means women are less able to build up pension pots.
Commenting on the results, head of pensions Kate Smith said: “It’s shocking that 100 years after women secured the vote, we have a gender pay gap across every occupation.. The fact that the pay gap filters down to mean women receive lower pension incomes is a double blow.
“When you factor in that women’s ability to save is further interrupted by breaks in their career to raise a family or care for elderly parents, the pension gap reaches epic proportions, making it difficult to catch up.”
She added: “Gaps in pension savings history leave you worse off in retirement — but for women who take time out of their career this is unavoidable and could mean they have to work longer to make up the shortfall.”
However, Smith argued all hope is not lost, and the earlier women are able to address the shortfall, the better. She said women in the early days of their career are within touching distance of men’s overall savings, and there are a number of steps women can take to increase their chances of a secure retirement.
As the cost of filling a shortfall increases significantly the closer women get to retirement, they are in danger of potentially running out of money in retirement if the pension pay gap continues to widen with age, she added.
Article by Victoria Ticha and reproduced with and permission of Professional Adviser
30 January 2018