11May

Research by pension switching advisory firm Profile Pensions shows that, in some areas of the UK, the ‘gender pension gap’ could be as high as 50%. The gender pension gap is defined as the difference between the level of pension income that can be expected by men and women.

The gap in each region of the UK is:

  • Northern Scotland – 49.6%
  • East Anglia – 48.5%
  • Central Southern England – 43.6%
  • South West England – 43.1%
  • East Midlands – 42.4%
  • South East England – 41.9%
  • North East England – 39.1%
  • Southern Scotland – 38.8%
  • North West England – 37.8%
  • Wales – 37.3%
  • Northern Ireland – 32.8%
  • West Midlands – 30.4%
  • Greater London – 29.9%

The average gender pension gap across the UK is 39%. The average male pension is valued at £40,084, compared to £24,445 for the average female pension.

In Northern Scotland, where the disparity is largest, men have an average pension value of £41,603, compared to the average woman’s pension value of £20,978.

The figures are based on data from around 20,000 customers of Profile Pensions.

The firm suggests various reasons for the large disparity, including:

  • Men are still earning more than women, on average, and pension contribution levels are often directly linked to incomes
  • Women are more likely to take time out of work to bring up children or care for relatives
  • More women than men work part-time, with many earning less than the £10,000 threshold for automatic enrolment into workplace pensions

Profile Pensions also mention the recent Scottish Widows report, which showed that 17% of women are currently saving nothing for their retirement, compared to 13% of men.

Profile Pensions chief investment officer Michelle Gribbin said:

“What we see with these findings, sadly, is that the gender pay gap and the gender pension gap go hand in hand.

“Men, on average, earn more than women, and therefore can save and receive larger contributions from employers into their pension pot. It’s clear there’s much more to be done to help women gain the security they need going into retirement.

“Under current UK law, employers contribute 3% to the employee’s pension pot, 4% comes direct from their payroll and the remaining 1% is made up by tax relief. Employees are able to decrease or increase this anytime that they see fit.”

However, a separate study by consultancy firm Barnett Waddingham shows that 44% of working age women who already have private pension provision have taken steps to address the gender pension gap, once they heard of its existence. The most common way of addressing the issue was increasing their level of contributions.

Barnett Waddingham’s recommendations include:

  • The £10,000 threshold for automatic enrolment should be reviewed
  • An increase to the minimum workplace pension contribution should be considered, as many employees simply contribute the minimum they are allowed to
  • The upper age limit for auto-enrolment should be removed
  • The state pension should be reviewed to address the needs of those who take career breaks
  • Better financial education should be available
  • A flat rate of pensions tax relief should be introduced

Barnett Waddingham policy and strategy lead Amanda Latham said:

“Recent months have shed light on the gender pensions gap – leaving women dangerously underprepared financially for retirement – and it seems that this is not falling on deaf ears.

“While this is encouraging, it’s critical that the onus for change does not fall on individuals alone – the pension system is intrinsically biased towards men, creating a stark disparity in wealth at retirement that needs to be addressed at its core.”