January 30, 2024 | Sarah O'Flaherty
The Gender Pension Gap: Disadvantages faced by women.
In this article, Rachael from Willow Tree Financial Services outlines the gender pension gap that still exists in today's society.
In the UK, the gender pension gap presents a critical disadvantage for women, impacting their financial security as they approach retirement. This gap is a result of systemic issues rooted in gender inequality, affecting women’s ability to accumulate adequate pension savings compared to men.
Startling statistics: A stark representation of this disparity is evident in the average pension savings of men and women. According to AJ Bell’s Money Matters report, men have an average of nearly £49,000 in their pension pots, whereas women have just over £32,000. This significant difference underscores the challenges women face in securing a stable financial future.
Career Interruptions and reduced earnings: A primary factor contributing to this gap is the career interruptions women often experience, notably due to maternity leave or part-time employment to manage family responsibilities. These breaks not only halt pension contributions but also lead to lower lifetime earnings, reducing the amount that can be saved for retirement. Additionally, upon returning to work, women frequently find themselves in lower-paid roles, further diminishing their pension contributions.
Part time work and long term impacts: The majority of part-time workers in the UK are women. This employment pattern, coupled with long career gaps, significantly disadvantages women in terms of pension accumulation. The NOW Pensions report highlights that women would need to work an additional 18 years in full-time employment to match the pension savings of their male counterparts.
Divorce – A double blow to financial security: For divorced women, the situation is even more precarious. They often face lower levels of homeownership and are more likely to be employed in part-time, low-paying jobs. This economic vulnerability is compounded by the fact that pension pots, a crucial asset in retirement, are frequently overlooked in divorce settlements. Consequently, many divorced women find themselves with considerably smaller pensions, exacerbating their financial insecurity.
The Plight of Single Women: Single women face unique challenges in pension savings. With an average pension pot of just over £29,000, they lag behind the overall average for women. The lack of a partner’s financial support, combined with the higher costs associated with living alone, places single women at a distinct disadvantage regarding retirement savings.
Addressing the Gap: This systemic issue calls for increased awareness and proactive measures by women. Regularly monitoring pension statements and seeking professional financial advice are crucial steps. Women must be vigilant in understanding their pension arrangements and actively plan for their future financial wellbeing.
In conclusion, the gender pension gap in the UK is a profound issue that disproportionately affects women, stemming from wider societal and economic inequalities. It highlights the need for greater attention to women’s financial planning and the importance of addressing gender disparities in the workforce to ensure a more equitable future for all.
Written for WayfinderWoman, by Rachael of Willow Tree Financial Services.
At WayfinderWoman we can help women to gain confidence and take control of their lives, in and out of the workplace. Please note we are not able to give financial or legal advice.
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See Rachael’s webpage here : https://www.willowtree-fs.co.uk/
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