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Women experience large shortfall in pension contributions

The major findings were as follows:

  • In 2016 men under 35 received £217 more in employer pension contributions than women under 35
  • The gap increases with age. Men aged 34 to 44 received £594 more than their female counterparts and those aged 45-55 earned an average of £1,287 more.
  • Between 2013 and 2016, employer pension contributions equalled 7.8% of men’s salaries, while the figure for women was 7%.

There were found to be three main factors behind the shortfall: 1, the gender pay gap, which, according to the latest figures from the Office for National Statistics, currently stands at 9.4 per cent and leads to lower contributions from employers; 2, men being more likely to have jobs in business sectors with more established and generous pension schemes; and 3, the fact that women are far more likely to take a career break to raise children than men.

The commissioner of the survey, Rose St Louis, said the difference in employer contributions “presents a serious and growing problem”, adding that workplace engagement and guidance will have a vital role in helping women effectively grow their pension pots. “It is now crucial that greater focus is placed on ensuring that this gap is not allowed to grow any further,” St Louis said.

The findings also raise a very serious issue regarding the auto-enrolment system, which makes it compulsory for employers to enter their employees into a pension scheme if they earn more than £10,000.

Citizens Advice has found there are around 100,000 workers,72,000 of them women, who do not qualify for auto-enrolment because they work multiple jobs, none of which earn them more than the £10,000 threshold. This means they have no entitlement to an automatic pension enrolment even if their combined salaries still come to more than £10,000.

The chief executive of Citizens Advice, Gillian Guy, acknowledged there is a flaw with the system, saying that too many people, particularly women are “shut out” of a crucial opportunity to save for their retirement.

A spokesperson for the Department of Work and Pensions said that, while the auto-enrolment system has helped increase the number of women with workplace pensions since its introduction, “there’s more to do” to help women, and anyone with more than one job, get fair treatment. A Government review of auto-enrolment policy will hopefully identify who it is failing and lead to improvements.

Expert help with planning your retirement fund

It is clear these pressing issues need to be addressed to create fairer access to pension income across the UK, and hopefully the review of the system will mean hardworking women and those who choose to work multiple jobs won’t have their retirement suffer as a result.

Having a retirement fund large enough to suit your needs in later life is very important. Any decisions that could potentially affect the amount in your pension pot should not be made lightly, and many people will require help protecting their finances and reaching their financial goals.

For any financial advice relating to your pension, you can trust the financial advisers at Blacktower. We can help you make the most out of your money, offering expert guidance with the most complex matters, including the best ways to grow your pension pot. We are based in London as well as many other locations around the world. So whether you want to meet with expat financial advisers in Sweden, find out about estate planning in France, or learn about the best way to save for your child’s education fees, get in touch with Blacktower today.

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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