Pandemic widens pensions pot gender gap
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The gender pensions gap grew to nearly £200,000 this year as the Covid-19 pandemic took a heavy toll on women’s finances, according to new analysis.
The difference between the average pension pots of men and women aged over 55 grew to £184,000 in 2021, or £26,000 more than the previous year, according to research published this week by more2life, an equity release provider.
Around one-third of women who took part in a UK-wide survey that was part of the analysis said their financial situation had worsened since the start of the pandemic in early 2020, hampering their ability to fund or save for later life.
Last year researchers from King’s College London and The Global Institute for Women’s Leadership found that nearly a third of women furloughed since the initial lockdown in March 2020 worked zero hours in July 2020, compared with 20 per cent of their male peers, indicating that female workers were more likely to be furloughed for longer.
This compounded an existing gap in the prospects for a comfortable retirement for men and women.
“Many women have faced job loss or redundancy during the crisis, as they are more likely to work in industries that have been forced to close such as retail and travel,” said the analysis, which was carried out by Opinion Matters, a research group.
“Similarly, women are also more likely to have been furloughed over this period, which could have also disrupted their ability to save into a pension or put money aside for retirement.”
Just over 1,000 people aged over 55 were surveyed for the research, which took place in April this year, and included questions about income and debt.
The results were analysed by the Centre for Economics and Business Research, alongside other data sets including the Bank of England/NMG Consulting survey of income and spending and the Wealth and Assets survey produced by the Office for National Statistics.
The more2life research found that women had lower retirement incomes across all lengths of working lives, with the widest discrepancy in retirement incomes for those who had worked more than 50 years.
Of these individuals, men received significantly more in annual retirement income (£19,404) than women (£11,592).
The research found that despite women contributing a higher proportion of their income to their pension, they would still need to work an additional 14.5 years to reach the same pension savings as their male counterparts.
“These figures are concerning and back up our own research showing women are struggling to recover financially in the current environment as a result of redundancy and furlough”, more2life said.
“Our research showed 62 per cent of women worried about being able to afford to pay enough into their pension in comparison to 57 per cent of men.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said there are things that women can do to plug the pensions gap.
“It’s not too late to make a difference to your pension value by continuing to contribute after the age of 55,” she said.
“You should also check with your employer to see if they will match any further contributions as this can give your retirement planning a real boost. State pension and benefits also form an important part of your retirement income and so you should check what you are entitled to and whether there are any gaps that need to be filled.”
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