Working women and the gender pension gap
A private pension may be more valuable than a family home.
Welcome to the bi-weekly update (#182) where we dive deeper into key topics, themes or issues specific to women and their lived experience.
The gender pension gap is the difference in retirement income between women and men. And as we know, women are being let down in both workplace and private pensions.
According to the trade union Prospect, the gender pension gap in the UK is 40.5%. And this is substantially larger than the gender pay gap, which was 15.4% in 2021, as reported by The Guardian.
The Pensions Policy Institute has outlined in a report that by their 60s, the median women’s pension wealth is £51,100 whilst men have nearly £156,600.
The reasons are clear:
women earn less than men (on average)
they are more likely to take more career breaks or work part-time
women have less disposable income to save and invest
and close to half of marriages end in divorce which negatively impacts women financially.
Not only do women form three-quarters of those excluded from automatic enrolment because they earn below £10,000 per year, but when a marriage breaks down, women do not usually receive a percentage of their partners’ pensions.
Although it depends on how a divorce is negotiated, private pensions are often ‘forgotten’ by lawyers, and many do not properly evaluate the size of a pension pot.
According to Office for National Statistics, pensions are often the biggest marital asset after property, making up 42% of household wealth.
Despite this, pensions are often underestimated even though they can be more valuable than a family home. And women risk losing out even more due to ‘no fault divorces’ introduced in the UK (couples avoid working with lawyers to keep costs to a minimum).
Women are unjustly paying for the gender pay gap twice. Seek information and advice so you understand your position and always explore your options.
As they say, the most expensive advice is no advice.
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The Purse provides content for informational purposes only, we do not provide investment advice. Please do your own research or speak to a financial adviser.