£100,000 pensions gap for women working part-time
In the last two editions of Sisterhood Speaks we have spoken about a couple of ‘gaps’ which women tend to face in their financial planning compared to men; specifically the savings gap – with women typically not building up the same level of savings as men over their working lives – and the insurance gap – with women often leaving themselves not suitably covered in the event of illness or even death.
You might not be surprised to read that another gap has been found following a recent report. That is that women in part-time work face being up to £105,000 worse off in retirement than their male counterparts.
Now Pensions' Facing an unequal future - closing the gender pensions gap report has revealed that women who balance part-time work with caring responsibilities are facing a 47% reduction in their pension pots compared to men by their late 50s.
The research shows that, by their 60s, women typically have £51,100 in their retirement pots while men have three times this with savings typically sitting at £156,500.
The report reveals for women to draw the same pension income throughout their retired lifetime, women would need to save around 5%-7% more than men by retirement age to allow for living longer.
This "part-time pensions penalty" has a bigger impact than the gender pay gap, which cuts women's pension savings by 28% as a result of them typically earning 18% less compared to men in their lifetime.
Workplace Pensions limitations can also leave women with smaller saving pots than men in retirement as a part-time salary may leave them ineligible to be enrolled in their employer’s pension scheme if their salary is below £10,000 - meaning they will miss out on additional savings and receiving valuable employer contributions.
The Fawcett Society - a charity campaigning for gender equality - chief executive Sam Smethers said the "shocking pensions gap that women experience" could be reduced if we "lowered the threshold so that more low paid women in part-time work could benefit".
As more of these hard-hitting studies come to light, the more they emphasise just how important it is for women to get a stable financial plan in place.
As women we often have unavoidable reasons for having to work part-time or even take breaks from our career, whether it is looking after our children, caring for our partners or older relatives or because of our own illnesses. It hardly strikes me as fair that when these roles are thrust upon us – i.e. being parents or carers; typically seen as female roles – that we should be punished so severely further down the line.
It is never too late to start your retirement planning and it is certainly never too early. If you would like to review your pensions and future retirement needs in a clear, jargon-free manner then please get in touch – I would be more than happy to help.
**The value of your investment can go down as well as up and you may get back less than the amount invested**