The gender pension gap has been shown to begin at birth as parents tend to boost boys’ pensions over girls.
According to a Freedom of Information request by Hargreaves Lansdown, 14,500 girls aged 15 or under had money paid into a pension for them compared to 15,300 boys in 2019/20.
Parents and grandparents can begin a child’s retirement planning by making contributions to a junior self invested personal pension.
They are able to contribute £2,880 per year to a child’s pension, or any non-earner for that matter, up until age 75 and receive tax relief topping it up to £3,600.
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey, said: “Part-time work, lower pay and time out of the workforce are key causes of the gender pension gap but this data shows the problem may start even earlier. The number of girls having their pension kickstarted by parents or grandparents remains consistently lower than for boys.
“Starting early can really help girls bridge the gender pension gap by mitigating some of the damage caused by time out of the workforce later and yet more boys are benefitting from this early boost than girls.”
On average, an individual contributing £150 per month would have accrued a pension pot of around £26,000 for a young person by the time they hit 18.
If they did not make any further contributions the pot could be worth £290,000 at age 65, assuming investment returns of 5 per cent.
However, while it begins at birth, the FOI revealed the gap is closing as in 2015/16, only 13,800 girls had money paid into a pension compared to 15,800 boys.
Morrissey said keeping the money invested gives it the opportunity to grow into a “tidy sum” that they can then top up with their own pension contributions when they are auto-enrolled into a workplace pension at age 22.
“Any amount can make a real difference,” she said. “HL data shows that £120 per month would get a tax relief top up of £30 from the government and this could give someone around £26,000 by the time they are 18.
“If they then went on to make regular pension contributions boosted by their employer during their career, they would approach retirement with a robust retirement plan.”
She explained that contributing to a child’s pension is a great way to get their retirement planning off to a “flying start” and yet the numbers of people taking advantage remain relatively flat.
In 2019/2020, the figure stood at 29,800, compared to 29,600 in 2015/16.
“This is only a tiny fraction of the number of people who could be benefiting from getting a firm foundation in place for their retirement planning as early as possible.”
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