35% gender pensions gap revealed in private pensions
The latest data from the Department for Work and Pensions has revealed a 35% gender pensions gap in private pensions.
The latest data from the Department for Work and Pensions has revealed a 35% gender pensions gap in private pensions. Despite the measures taken to address discrepancies in state pension payments between men and women, there remains a substantial journey to eradicate the gap, particularly in the realm of private pensions.
It is well known that women earn, on average, less than men and this therefore limits the amount that they are able to save towards a pension. This is exacerbated by issues such as differing work patterns due to childcare responsibilities. Recent data highlights this issue, as the male employment rate for adults aged 16 to 64 in 2022 was 79%, compared to the female rate of 72%.
This has a direct effect on the total annual contributions into workplace pensions for automatic enrolment eligible female and male employees. The data from 2021 found that the annual contribution for men was £62.6bn and for women it was £50.2bn, amounting to a 17% contribution gap.
Discrepancies of this nature over a working life contribute to a more pronounced difference in pension wealth by the time individuals approach retirement, as women are disproportionately impacted by earnings thresholds and qualifying earnings limits for automatic enrolment.
Thankfully, there are encouraging policy steps in place to address the gender pension gap, such as the Government’s recent commitment to rectify issues surrounding parents who have not claimed child benefit and therefore miss out on the full state pension owed to them. In order to address this, the Government intends to allow eligible individuals to retrospectively claim their National Insurance credit. However, whilst initiatives of this kind will help close the gap on the state pension front, there is still much work to be done to see similar progress in the private sector.
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