Women would have to work from the age of four, or continue to work until 83, to secure the same pension pot as men.
That’s the startling message behind a slew of new data that shows half the population faces astonishing differences in old age funding thanks to a perfect storm of traditional expectations over unpaid care, lower pay and therefore less extra retirement cash from employers and government.
With a life expectancy four years longer than men, women need to have saved more throughout their lifetime to close the gender pension gap – the difference between retirement funds by gender, pension provider Now Pensions warns.
And yet women retiring today have just £69,000 in personal retirement savings compared with £205,800 for their male peers.
They would need to work an additional 18 years to save the same amount of money into their pension as men.
Despite the highest female employment rate on record – at almost 73 per cent – one in six female workers don’t earn enough to be eligible for the workplace pension – the scheme that automatically boosts employees retirement savings with additional government and employer contributions to their pension pot.
In other words, those earning the least get the least help.
And yet, with the fundamental flaw in the system repeatedly flagged since the introduction of this automatic enrolment back in 2012, calls to abolish the lower threshold so all employed staff can benefit from the vital contributions have fallen on deaf ears.
More than 5.8 million women are now working in part-time roles, with earnings for the average part-time worker currently coming in at £6,922, well below the minimum earnings to be automatically included in the workplace pension.
Joanne Segars, chair of trustees at Now Pensions said: “It is now a decade since auto-enrolment was launched and it just proves what a powerful tool inertia has been to get over 10 million new savers into auto-enrolment.
“However, it is by no means a perfect picture as almost the same number of people are currently ineligible. Women make up the biggest proportion of part-time workers in the UK and with reduced hours comes reduced pay. Millions of women have not been able to save via a workplace pension, nor take advantage of their employer contributions and the tax relief.”
Covid, with its significant hit to the working lives of mothers especially, has only made things worse.
Women spend an average of 10 years away from the workforce to start families and care for children and relatives, contributing to both the gender pay and pensions gaps by presenting fewer opportunities for career progression and higher salaries.
Over the past two years, working mothers have had to juggle work and caring responsibilities meaning that they are likely to have reduced their working hours or stopped working altogether.
“Pension policies and regulations have not kept pace with how many of us now live and work, especially since the Covid-19 pandemic,” adds Segars. “That is why we have been lobbying the government to fix these inequalities and enable ‘under-pensioned’ groups the same opportunity to build their retirement pot as others enjoy.”
Meanwhile, the spiralling cost of childcare is a hindrance to many working households as the cost of childcare now tops the average cost of a mortgage.
Policies aimed at alleviating childcare responsibilities, in terms of both time and stress, could help to improve the labour market inequalities experienced by working mothers, says Joeli Brearley, founder of campaign group Pregnant Then Screwed.
‘’We will only close the gender pension gap when women have equal access to the labour market,” Brearley says.
“Our outdated parental leave system ensures that it is almost always women who take time out of the workforce to care for their children and this unequal share of the care work continues for many years.
“Meanwhile, we have the most expensive childcare in the world as a proportion of a mother’s earnings, resulting in hundreds of thousands of women reducing their hours or leaving the workforce altogether as it doesn’t make financial sense to continue working.
“If the government were to invest in childcare and parental leave, we would undoubtedly see the gender pay gap and the gender pensions gap reduce, resulting in fewer women and families living in poverty.’’
“It is time for the government to acknowledge the huge problem of the gender pension gap and start doing something about it,” adds TUC president Sue Ferns, after the union’s analysis of the latest figures from the Office for National Statistics showed the average retired woman would fall four and a half months short of an average year’s retirement income among men.
“If we continue to close the gap at the current rate, it will be generations before women earn the same as men in retirement.”