Women would need to work until age 83 in order to close the gender pension gap, according to a report by Now Pensions.
Research by the workplace pension provider found that with women living on average four years longer than men, they need to have saved more throughout their lifetime to accommodate a longer time in retirement and close the gender pension gap.
Women aged 65 will have accumulated just £69,000 in private pension wealth, compared to men’s pension savings of £205,800.
The research also revealed that one in six women are currently ineligible for automatic enrolment into a workplace pension despite women's employment rate being at its highest since records began (72.7 per cent).
Now Pensions said this is leading millions to miss out on vital pension savings and increases their risk of pensioner poverty.
The report made use of data from two surveys that respectively questioned approximately 40,000 households and 10,000 households.
Now Pensions chair of trustees Joanne Segars, said: “It is now a decade since auto-enrolment was launched and it just proves what a powerful tool inertia has been to get over 10mn new savers into auto-enrolment.
“However, it is by no means a perfect picture as almost the same number of people (10.4mn) are currently ineligible. Women make up the biggest proportion of part-time workers in the UK and with reduced hours comes reduced pay. Millions of women have not been able to save via a workplace pension, nor take advantage of their employer contributions and the tax relief.”
Seagers explained that pension policies and regulations have not kept pace with how many individuals now live and work, especially since the Covid-19 pandemic.
“That is why we have been lobbying the government to fix these inequalities and enable ‘under-pensioned’ groups the same opportunity to build their retirement pot as others enjoy,” she said.
While the average UK pension pot has almost doubled to £111,600, women’s savings have hardly increased at all, the report revealed.
It found that if inflation and the cost of living are taken into account, women are arguably in a worse position than before.
Working, childcare and the pandemic
Research found there was a stark difference in working patterns between men and women throughout their careers, with just 27 per cent of women working mostly full-time throughout their careers, compared to 45 per cent of men.
Women spend an average of 10 years away from the workforce to start families and care for children and relatives, contributing to both the gender pay and pensions gaps by presenting fewer opportunities for career progression and higher salaries.
Over the past two years, working mothers have had to juggle work and caring responsibilities meaning they are likely to have reduced their working hours or stopped working altogether, Now Pensions explained.
Over 5.8mn women are working in part-time roles (38 per cent) which means they might not meet the £10,000 eligibility criteria to be automatically enrolled into their workplace pension, especially since the average earnings for someone working part-time is £6,922.
Flex Appeal author and founder Anna Whitehouse, said: "Flexible working is the number one way that we will close the gender pay gap. So, the idea that women are being penalised in later life by the gender pensions gap for working flexibly and therefore being able to work at all is exhausting.
“If women did not work flexibly and take on caring responsibilities, the economy would crumble.
Whitehouse added: “That this additional penalty is falling on women when they are at their most vulnerable is beyond cruel. We need to start supporting women; we need to level the playing field, and we need to start to close these gaps before things get any worse."
Now Pensions said the cost of childcare is a hindrance to many working households as the cost of childcare now tops the average cost of a mortgage.
Policies aimed at alleviating childcare responsibilities, in terms of both time and stress, could help to improve the labour market inequalities experienced by working mothers.
Pregnant Then Screwed founder Joeli Brearly, said: ''We will only close the gender pension gap when women have equal access to the labour market. Our outdated parental leave system ensures that it is almost always women who take time out of the workforce to care for their children and this unequal share of the care work continues for many years.
"Meanwhile, we have the most expensive childcare in the world as a proportion of a mother’s earnings, resulting in hundreds of thousands of women reducing their hours or leaving the workforce altogether as it doesn’t make financial sense to continue working."
She added: If the government were to invest in childcare and parental leave, we would undoubtedly see the gender pay gap and the gender pensions gap reduce, resulting in fewer women and families living in poverty.’’
sonia.rach@ft.com
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