The gender pensions gap is being worsened by the cost of childcare as it causes 36 per cent of women to leave their job which in turn halts pension contributions.
A report from not-for-profit pension provider The People’s Pension, published on May 13, found that after having children, nearly half of women (44 per cent) reduced their hours, more than a third (36 per cent) left work altogether and 15 per cent returned to work in a lower grade or lower paid role.
The survey of 2,000 mothers across the UK also showed that almost four in 10 women (38 per cent) working part-time would choose to increase their hours if childcare was cheaper.
These changes can have a significant impact on mothers’ ability to save for a pension at the same level as men, The People’s Pension warned.
This is because women are likely to stop or significantly reduce their pension contributions meaning they could miss out on employer contributions.
Of those that left their role, 43 per cent said it didn’t make sense to keep working and pay childcare, while 29 per cent said they could not afford suitable childcare.
Gregg McClymont, director of policy at The People’s Pension and former shadow pensions minister, said: "To look after their children, women often reduce their working hours or stop working altogether and their rates of pay and potential for progression can be unfairly affected, all of which mean their potential pension savings take a hit.
"Of course, many women choose to reduce their working hours or leave their job because they want to spend more time with their kids, but our research is clear – the cost and availability of childcare is a key factor for many women.
"If we’re going to tackle pensions inequality, not only are changes to auto-enrolment required but better provision of affordable childcare is a must to enable those mums that want to keep working or work more hours, to be able to."
A report (published in November 2018) by trade union Prospect found that the gender pensions income gap (39.5 per cent) was more than double the size of the total gender pay gap (18.5 per cent), with the average female pensioner £7,000 per year worse off than a male counterpart.
Mr McClymont said: "By the time the average woman reaches retirement, the size of her pension pot will only be a fifth of that of a man her age.
"Women are getting short-changed on pensions for several reasons – not least because of the caring responsibilities they tend to take on across their lifetime."
To help tackle the pensions gap, The People’s Pension has suggested a number of measures including cutting the required earnings to be eligible for an auto-enrolment pension to the national insurance threshold.
The last review of auto-enrolment in 2017 showed that if the earnings trigger was reduced to the level of the lower earnings limit then 1.2m employees would be brought into occupational pension scheme membership and 78 per cent of them would be women.