Female savers are more than twice as likely to be below the £10,000 auto-enrolment threshold than their male counterparts, research from the Trade Union Congress (TUC) has found.
The research, 'Why our pension system delivers lower incomes for women, and how to close the gap', included analysis of figures from the Office for National Statistics (ONS) which found 10.9 per cent (or 1.4mn) of female savers aged 22-65 earn less than £10,000 and therefore do not meet the auto-enrolment threshold.
This was found to be more than double than the 4.3 per cent of male savers who failed to meet the same threshold (565,562 in total).
The research also provided insight into future developments of auto-enrolment, such as the lowering of the age criteria from 22 to 18, as discussed in the automatic enrolment review published at the end of 2017.
Though the review stated that the lowering of the minimum age would bring a further 900,000 young people into auto-enrolment and benefit them by preparing them for retirement, TUC's research argued that lowering the threshold could deepen the gender pension gap.
The research that detailed that, following a lowering of the minimum age for auto-enrolment, the number of women excluded from workplace pensions because of low earnings is likely to increase - 36.3 per cent of women would be below the £10,000 threshold compared to 14.6 per cent for men.
Samantha Gould financial adviser and head of campaigns at Now Pensions warned that “there simply is not enough time in women’s lives to close the gender pensions gap”.
Gould explained that, while auto-enrolment has been a success for "millions of savers", many women remain locked out of workplace pension savings.
For example, as shown in Now Pensions research, “a working woman would need to start saving into a workplace pension from the age of four to save as much into their pension as a working man”.
The state pension was also identified in TUC’s research as contributing to the gender pension gap, especially for older pensioners.
It was reported that women born in the 1940s receive 25 per cent less in retirement income on average than men, as they are likely to have built up less earnings-related state pension than men and are more likely to have incomplete national insurance records.
This gap fell to 5 per cent for the most recent retirees, as a result of the move to a flat rate state pension.
Proposed solutions
To help close the gender pensions gap, TUC’s research proposed the £10,000 earnings threshold should be phased out so that low paid workers can be included.
It also proposed that the lower earnings limit that lets employers make no pension contributions on the first £6,240 of a worker’s income should be removed.
Another solution, which was praised by Gould, was the recent launch of the Pensions Equity Group (PEG).
She said: "Redressing the gender imbalance is a complex and extensive issue, but bringing the industry together to champion social change here is a positive step in shining a spotlight and making pension saving fairer for all”.
tom.dunstan@ft.com
