Women must not be second class pension citizens

MALE pensioners enjoy retirement incomes double the size of women. That is the shocking statistic from the Office for National Statistics (ONS).

Men aged 65 to 69 have a median £315,300 saved in their work pensions, compared with £157,900 for women the same age. For 70 to 74-year-olds, men typically have £220,900 while women have £100,700. Aged 75-plus, the figures are £135,600 against £70,300.

The gender pay gap across all employees, a contributory factor that makes women poorer in retirement, is 17.3 per cent. For full-time employees, it is 8.9 per cent.

Other factors include women being more likely to work part-time or take time out of the workplace to look after family members, such as children or elderly parents.

The figures, covering April 2016 to March 2018, taken from the Wealth and Assets Survey, a study of household finances, found that 56 per cent of men under state pension age had savings in a private pension, compared with 51 per cent of women.

There have been calls for the government to overhaul pensions and come up with a package of proposals to help make sure carers do not lose out. One suggestion would allow partners in work to pay into the pension of a partner at home.

Overall, the ONS survey revealed a boost in private pensions, mostly due to the launch of auto-enrolment. Total private pension wealth was

£6.1 trillion between April 2016 and March 2018; it was £3.6 trillion a decade earlier.

In a new study, Understanding the Gender Pensions Gap, the Pensions Policy Institute urges a family career top-up – when pension contributions continue in some form while on maternity, out of work to undertake caring responsibilities or in part-time work.

Commenting on the report

Yvonne Braun, director of long-term savings at the Association of British

Insurers, told New Model Adviser: “Something needs to change. “Women are being penalised for being mothers and carers and the existing gender pay gap only exacerbates the situation, leading to a major gap in their finances by the time they retire.”

On the plus side, more women work in the public sector, so for those who have a pension, they are more likely to have a defined benefit one.

And women’s weekly state pension income has increased from £126.37 to £143.76.

However, women’s pensions need to go further on average as they live 3.7 years longer than men. They therefore need to save more into their pensions.

A total of 1.4 million mothers do not qualify for auto-enrolment. This is the number of employed mothers with dependent children who do not earn above the £10,000 threshold to qualify for auto-enrolment contributions.

Think-tank, the Social Market Foundation, has said the government should pay public money into the personal pensions of women who take time out of work for caring duties.

A woman on maternity leave carries out weekly unpaid work with an economic value of £762.75, according to the ONS, well above the average regular weekly wage.

Applying the current three per cent minimum contribution rates from auto-enrolment pension schemes to such a value would mean a new government contribution of £22.88 per week, or £1,189.89 per year, to that woman’s pension pot.

The Social Market Foundation said: “Taking time out of the labour market to raise children or care for relatives is one of the key causes of the pension gap. Addressing the lack of pension accumulation during this period is essential if we are to close – or even narrow – the gap in pension savings between men and women.”

Pressure is mounting around an issue which needs to be addressed.

Trevor Law is managing director of Eastcote Wealth Management, chartered financial planners,

based in Solihull. Email: tlaw@eastcotewealth.co.uk The views expressed in this article should not be construed as financial advice