05 June 2023
If you are covering the latest gender pension gap in private pension figures, please see the following comment from Megan Rimmer, chartered financial planner at Quilter:
"Despite progress the United Kingdom is still grappling with a considerable gender pensions gap which is particularly wide when it comes to private pension provision. The latest data shows a Gender Pensions Gap (GPeG) of 35% in private pensions, and while we have seen measures taken to address discrepancies in state pensions payments between men and women, there remains a substantial journey to completely eradicate this gap, especially in the realm of private pensions.
"It's a known fact that women, on average, earn less than men, consequently limiting the amount they can save towards a pension. Moreover, women often have differing work patterns throughout their lives as compared to men frequently due to childcare responsibilities. Recent data indicates that among adults aged 16 to 64, the male employment rate in 2022 was 79%, whereas the female employment rate was 72% really illustrating this point.
"The ultimate ramification of this is that the total annual contribution into workplace pensions for AE eligible female and male employees in 2021 was £52.0 billion and £62.6 billion, giving a contribution gap of 17% however this is an even larger gap than the employment rate.
"The government’s extension of its policy providing 30 hours of free childcare should provide a significant boost in addressing this issue. By making childcare more accessible, the shared responsibilities between partners could potentially decrease the gender pension gap that usually arises from women taking extended periods off work to care for children.
"Even though women currently earn less than men, this discrepancy over a working life can contribute to a more pronounced difference in pension wealth by the time they approach retirement. For example, for employees eligible for Automatic Enrolment (AE), their gender pension gap is 32%. This is largely due to a larger proportion of men’s earnings qualifying for pension contributions, with women being disproportionately impacted by earnings thresholds and qualifying earnings limits for auto-enrolment.
"An encouraging policy step to address the gender pension gap is the government's recent commitment to rectify issues surrounding parents who have not claimed Child Benefit, thus missing out on the full state pension amount due to unclaimed National Insurance contributions. The government intends to legislate to allow eligible individuals to retrospectively claim National Insurance credit. Such initiatives are essential in advancing towards a more equitable state pension system but the private sector still has a long way to go before it closes the pensions gap."
