Self-employed women will be worse off post-work as the retirement income gender gap widens, research from Prudential has found.
According to Kirsty Anderson, a retirement income expert at Prudential, when people become self-employed, paying into a pension can easily slip down their priority list.
This was particularly pronounced among self-employed women, whose incomes are, on average, lower than those of employed women, she said.
Just 12 per cent of women who work for themselves contribute to a personal pension, compared to 59 per cent of employed women who have the opportunity to pay into schemes offered to them by employers, the Prudential research found.
Ms Anderson said it was important to note “one of the main reasons for lower average retirement incomes among women is the periodic gaps in their pension contributions”.
The figure for men is also low, at 17 per cent, showing a distinct lack of personal pension provision among self-employed workers.
The rate of increase for self employment for women has been double that of men for the past four years, with 1.5m women working for themselves between April and June 2016.
This boom in female self-employed workers means the gender gap in pension savings, which has been shrinking over recent years, will be set to widen.
Ms Anderson added: “For most people, and especially those who are self-employed, a consultation with a professional financial adviser will help them to put a plan in place to save regularly for as comfortable a retirement as possible.”
The gap between male and female retirement income has been a persistent problem and a study released in March of this year from the Pensions Policy Institute showed that women have on average, £7,500 in savings defined contribution schemes, compared to £14,500 for men.
The difference was being reduced; Prudential’s Class of 2016 survey showed women’s highest average expected retirement income on record at £14,450 a year.
Despite this Prudential’s results still showed female retirement income to be on average £5,400 a year lower than men.
These results followed plans from the Department of Work and Pensions, announced in May, which would implement a much quicker schedule for state pension age equalisation measures.
Ms Anderson at Prudential said she believes some women may have found themselves caught out by this change and this may have had an effect on the widening of the gender gap, which was reported in August this year when Prudential issued its Class of 2016 survey.
The low rates of self-employed women contributing to pensions could be due to an overall gender pay gap in society. Latest figures from 2014/15 show self-employed men simply earned £6,915 more annually than self-employed women, the Prudential Class of 2016 survey showed.
The report also said more self-employed women have gone into part-time work and this was likely to be contributing to overall lower pay statistics and lower contributions to personal pensions.