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Employers pay £47k less into women's pensions, according to study

Women are losing out on tens of thousands of pounds in employer pension contributions as a result of the gender pay gap, new research suggests.

A survey by Zurich Insurance (IOB: 0QP2.IL - news) , which looked at more than 250,000 pension plans, suggested that a shortfall in employer contributions for women compared to men could mean female employees losing out on £47,000 by the end of their working life.

The problem stems partly from the gap between the salaries of men and women in work and partly from the nature of work undertaken; men are still less likely to take career breaks to raise their children and are more likely to work in larger, established industries with more generous pension schemes.

The research, which is one of the largest studies of workplace savings ever undertaken, looked at pension plans broken down by age, gender and the contribution levels of both employers and employees alongside income.

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It found that last year, on average, men under the age of 35 received £217 more in pension contributions than women of the same age.

It also revealed that in the four years to the end of 2016 men received contributions equalling 7.8% of their salary from their employers annually, whereas for women the figure was just 7%.

This difference, when exacerbated by the existing gender pay gap, meant that the value of employer contributions over the four-year period was £3,495 for men and £2,489 for women.

Rose St Louis, commissioner of the survey, said: "The impact of the gender pay gap on women's pension pots is no secret, but this difference in the contributions that they receive from their employer presents a serious - and growing - problem.

"The 'triple effect' of smaller salaries, career breaks for women and lower contribution rates needs to be addressed: we can't ignore a £47,000 shortfall.

"Workplace engagement and guidance has a central role to play in helping women make the most of their saving potential while they are working full-time, but it is now crucial that greater focus is placed on ensuring that this gap is not allowed to grow any further."

Patrick Woodman, head of research for the Chartered Management Institute, also commented on the results and stated that "the gender pension gap and pay gap go hand in hand".

"CMI (BSE: CMI.BO - news) 's long-running research shows that men are 40% more likely to be promoted in higher-paying management roles and just one in three director level roles are held by women, despite gender balanced management teams outperforming the competition," he said.

"Closing the pension and pay gaps would benefit us all, potentially adding an extra £150bn to UK plc if we achieve it by 2025, according to (consulting group) McKinsey.

"The Government's gender pay gap reporting regulations will certainly help, shining a spotlight on this issue and encouraging employers to set targets for change."