Research by the Centre for Economics and Business Research, in partnership with equity release provider More2Life, has indicated that the pandemic has widened the UK’s gender pension gap, especially amongst the over 55s who are due to retire in the near future.
The average man in this age group is currently on track for an annual pension income of £20,712, some 38% higher than the figure for the average woman, which is £14,964.
When extrapolated over the average lifetime, this gap of almost £6,000 per year translates into men receiving £184,000 more in pension income than women. This £184,000 figure is, the CEBR says, 26% higher than the equivalent figure for the 2020 survey.
This large gap exists despite the fact the CEBR says that women are saving a higher proportion of their earnings – 9.4% compared to an average of 8.3% for men.
To achieve parity, the average woman would need to work for 14.5 years longer than the average man.
It cites factors such as:
- The continuing gender pay gap, with men still receiving higher salaries than women
- Women are much more likely to have been financially affected by the pandemic, for example they are more likely to have been furloughed or made redundant, or have had to shoulder a larger responsibility for childcare during school closures
- Women are more likely to work in sectors adversely affected by Covid-19, such as hospitality and retail
The Centre cites data from the Trades Union Congress which shows that the number of women made redundant in the UK between September and November 2020 was 176,000, 76% higher than was the case for a three-month period during the peak of the 2008 financial crisis.
The CEBR also says 30% of women and 25% of men say they have experienced an adverse financial impact as a result of Covid.
More2Life chief executive officer Dave Harris said:
“Although women appear to be better at saving into their pension, they still face a retirement that is less comfortable and financially secure than their male counterparts.
“The stark difference in retirement incomes highlights the need to address the root causes of financial gender inequality and better support women as they make choices around how to use their assets both in the lead up to and during retirement.
“It’s clear that the Covid-19 pandemic has caused significant disruption to many people’s retirement savings, but the impact has been most acutely felt among older women.
“As we begin to think about what a post-Covid society looks like, it’s vital that the industry and government does more to encourage women to engage with long-term financial planning.”