By Amanda Venables, Head of Operations, AVC Wise.
The Gender Pensions Gap: Why Women Are at Risk of Financial Insecurity in Retirement
As they reach their 60s, “the median women’s pension wealth is £51,100, whilst men’s pension wealth is near £156,500” - Pensions Policy Institute, 2019.
Unfortunately, headlines like the above come as no surprise. Conversations about inequality between men and women have been happening for decades.
International Women’s Day is celebrated on March 8th every year to recognise the social, economic, cultural, and political achievements of women around the world. It is also a day to raise awareness about the challenges that women face and the ongoing fight for gender equality. In this blog post, we will focus on pensions as a crucial aspect of women's financial security, which is often overlooked.
Pensions are a critical source of income in retirement for many people, but women face unique challenges when it comes to retirement savings. “Legal & General published research showing that women have lower pension pot sizes in every age bracket, with the situation “significantly deteriorating” as they approach retirement” The Guardian, 2021.
One of the main reasons for this is the gender pay gap. Women still earn less than men on average, which means they have less money to put towards retirement savings. In addition, women are more likely to take time out of the workforce to care for children or elderly relatives, which can further reduce their earnings and their ability to save for retirement.
Another factor that affects women's pensions is the fact that they tend to live longer than men. This means they need to save more money to cover their living expenses in retirement. However, because they often earn less and take career breaks, they may not have enough money saved to last throughout their retirement years.
Fortunately, there are steps that women can take to improve their pension prospects. One important step is to start saving for retirement as early as possible. Even small contributions made regularly over a long period of time can add up significantly. To maximise their pension pots, women should consider participating in any workplace pension schemes that are available to them and should also explore other savings options.
However, society can also take responsibility for the gender pensions gap. It’s been suggested that “one of the biggest changes that would begin to close the gap would be a move towards more flexible and progressive workplaces” PensionBee, 2020. The Covid-19 pandemic demonstrated that employees work just as effectively in a more flexible environment, but despite this many employers have yet to offer workplace flexibility. For the benefit of pay equality, flexible working needs to be seen as beneficial to the whole workforce, so women aren’t restricted when looking for a job that fits around their caregiving arrangements.
Finally, it is important to advocate for policies that support women's retirement security. This includes initiatives to close the gender pay gap, as well as policies that make it easier for women to take time off work for caregiving responsibilities without sacrificing their pension benefits.
On this International Women's Day, let us all commit to working towards a future where women can retire with security and dignity. By taking action to improve our own pension prospects and advocating for policies that support women's retirement security, we can help build a more equitable and just world for all.