Gender pension gap is 35% at age 55, says the DWP

Women reach age 55 and have saved a third less for private pensions than men, a new government report shows.

The gender pension gap is 35 percent, or a slightly smaller 32 percent among people automatically enrolled in work schemes, according to the first official measurement of the issue from the Department of Work and Pensions.

Previous industry research has consistently shown that women have much lower pensions than men, as lower wages and unpaid care work undermine their ability to save for old age.

Pension experts today welcomed signals from current Minister of Pensions Laura Trott that the subject is on the government’s agenda.

The new figures show that by age 55 – the age when savers can first tap into private pension pots – women will have saved nearly £100,000 and men will have saved nearly £150,000 in private pensions. That is after those who have not saved anything have been excluded.

The pension gap of 35 percent for 2018-2020 has been reduced from 42 percent in 2026-2008.

However, it has fluctuated over the past decade after auto-enrollment led to an influx of low-earning women into workplace pensions.

‘Due to the number of people with a low income saving for a pension, the number of people with a small pension capital is increasing,’ says the DWP.

Gender Retirement Gap: NMPA stands for the normal minimum retirement age, which is currently 55 for people who have access to private retirement savings

This means the pension gap could widen even as women increase their own retirement wealth, it notes.

The DWP found that women eligible for automatic enrollment paid £52bn into their pensions in 2021, compared to £62.6bn saved by men.

“It’s a well-known fact that women earn less on average than men, which means they can save less for retirement,” says Megan Rimmer, financial planner at Quilter:

“Furthermore, women tend to have different work patterns compared to men throughout their lives, often due to childcare responsibilities.

“Recent data indicates that among adults aged 16 to 64, the male employment rate was 79 percent in 2022, while the female employment rate was 72 percent, which really illustrates this point.”

Rimmer says extending the government’s policy of providing 30 hours of free childcare should help narrow the pension gap that usually results from women not working for extended periods to care for children.

She also welcomed the recent commitment to close the gaps in the state pension for parents – mostly women – who did not claim child support because they were not eligible for the payments.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says: ‘The structural issues derailing women’s retirement planning are all too apparent.

At 10 percent, the pension gap between men and women is smallest between the ages of 35 and 39. Among the AE-entitled population, women’s pension assets are higher in their thirties.

“But once they hit the 40s, because the mix of staff time-out, lower wages, and part-time work wreaks its havoc.

‘The difference rises to 47 percent for the 45-49 age group. For the group that is eligible for automatic registration, that is 33 percent for the age group 40-44 years.’

Laura Myers, a partner at LCP, says the publication of the statistics by the DWP is an essential first step in addressing the wide gender gap in pensions.

“Laura Trott deserves credit for completing this work within months of taking office.

“This report not only puts the issue firmly on the government’s agenda, but it also means we can hold governments accountable to ensure progress is made on the yawning gap in pension entitlements between men and women.

While good progress has been made in recent years in narrowing the gender gap in state pensions, the gap in defined contribution pension entitlements between men and women is steadily widening, threatening the inequality we saw in the world of defined benefit pensions. to repeat.’

Gail Izat, workplace director at Standard Life, says: ‘The gender pension gap is still far too wide – we just shouldn’t still be seeing such a huge gap between men’s and women’s retirement savings as we enter the mid- to late s Approaching 2020.

The pay gap is a major contributing factor, plus the fact that women are more than three times more likely than men to work part-time, often due to the fact that they take on most of the family’s care responsibilities. take oneself.’

Izat adds that the government’s current measures to enable auto-enrollees to save from the first pound of income should help, as a higher percentage of women than men fall below the current starting position of £10,000.