21st century gender inequality as pension gap widens with age
- A gender pay gap, coupled with time spent out of employment to raise children and act as caregivers mean women build up less savings than men
- By the time women reach 50, they have on average only half the pension savings, £56k compared to £112k saved by men
- A 50 year old woman would need to pay an extra £360 a month to catch up with her male counterpart
- The cost of filling a shortfall increases significantly the closer women are to retirement
As the UK celebrates the 100th anniversary year of women winning the vote*, Aegon highlights the 21st-century inequality, the growing pension gender gap.
Aegon’s research shows the gap between men and women’s saving pots, which grows dramatically with age, will result in a gender divide in pensions income and means women will be considerably worse off in retirement.
|Age||Average female pension fund||Average male pension savings||Additional monthly contribution required for women to catch up by age 65|
|30||£21,029||£27,688||£21.25 extra a month|
|40||£38,195||£56,026||£73.81 extra a month|
|50||£56,116||£112,789||£360.92 extra a month|
Figures assume investment growth of 4.25% per annum after charges and contributions increase each year in line with inflation at 2.5%.
At age 30, women need to contribute an extra £21 a month to close the gap on men, by age 50, this has risen to an extra £360 a month, showing it pays to address any shortfall in savings as quickly as possible.
A number of factors including a gender pay gap, compounded by disrupted working patterns means women are less confident about retiring comfortably. In fact, half of women (49%) say they’re not confident about a comfortable retirement, compared to 33% of men.
It’s not a lost cause though, as there are a number of steps women can take to increase their chances of a secure retirement. A key starting point is making plans and reviewing savings.
Without a clear overview of savings, it’s impossible for anyone to set a realistic plan or be able to assess whether they’re on track for retirement. The fact that more than one in four (28%) women don’t know how much they’ve saved, compared to just 9% of men, puts them at a further disadvantage.
Estimating individual income needs in retirement also helps to set a realistic savings target. However, 42% of women have never thought about how much they’ll need, creating a danger that over the course of their career they’ll not save enough and will have to work longer or potentially run out of money in retirement - a prospect no one would relish.
Kate Smith, Head of Pensions at Aegon, commented: “It’s shocking that 100 years after women secured the vote, we have a gender pay gap across every occupation**. The fact that the pay gap filters down to mean women receive lower pension incomes is a double blow.
“When you factor in that women’s ability to save is further interrupted by breaks in their career to raise a family or care for elderly parents, the pension gap reaches epic proportions, making it difficult to catch up.
“Gaps in pension savings history leave you worse off in retirement — but for women who take time out of their career this is unavoidable and could mean they have to work longer to make up the shortfall. However, the earlier women are able to address the shortfall, the better. Our figures show that women in the early part of their career are within touching distance of men’s overall savings – by the time pensions freedoms are an option, the pension pots of men are out of sight.”
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Notes to Editors
- In the UK, Aegon offers retirement, workplace savings and protection solutions to around two million customers and employs approximately 3,450 staff. More information: www.aegon.co.uk
- As an international life insurance, pensions and asset management company based in The Hague, Aegon has businesses in over twenty five markets in the Americas, Europe and Asia. Aegon companies employ over 28,000 people and have millions of customers across the globe. Further information: www.aegon.com
- The value of an investment can fall as well as rise and is not guaranteed. You may get back less than the amount originally invested