I don’t exactly think that this is a surprising headline, but it’s certainly on that needs to be addressed.
So exactly how bad is it for us ladies?
Well, the latest figures from the Office of National Statistics (ONS) the Governments official office show that on average women will have a pension in retirement that is £106,000 lower than men. That’s a lot of money – and we live longer on average!
So why is that? Well, there are several reasons, some obvious, some less so.
One is the gender pay gap. Current figures show that on average women earn 7.5% less than their male counterparts for doing the same job. Not as bad as it used to be but still unacceptable, although the Government is actively trying to legislate to improve or reduce the gap. (I’m pleased to say that there is no pay gap at Christina Clegg Financial Planning Services as you might imagine!). But a lower salary obviously equals a lower pension and is compounded by increased investment growth on men’s higher pension contributions, especially over a lifetime of work.
A second reason is that men are more likely to have an older style final salary pension because they were in the workplace earlier and in greater numbers than women in the past. Although these schemes have now largely closed it will be many years before their value works its way out of the average retirement income calculations.
There is also the issue of career breaks, which women obviously take more of. This not only leads to lower contributions but also affects the state pension entitlement as well.
Another reason is that women are less likely than men to take investment risks with their pension funds. The ONS reports that only 14% of women have a financial adviser. That’s shocking number and maybe one of the reasons why women take less risk.
There is no reason for it. So come on girls, do something about your pensions and start by getting an adviser.
You can catch up. For example, recent L&G research shows that a 50-year-old opting out of a workplace pension now could be nearly £100,000 worse off by the age of 75 if they did not resume saving. However, restarting pension contributions in three years’ time would reduce that loss to £12,738 by age 75. Which shows that it’s never too late to make a difference.