According to a new report by The People’s Pension, the gender pensions gap is more than double the size of the gender pay gap, with the average female pensioner being £7,000 a year worse off than her male counterpart.*
This discrepancy, argues trade union Prospect, is even more damaging than the gender pay gap, as it comes later in a woman’s life, where she will find it harder to do anything about it.
One root cause for the gap, according to the report, is the ‘motherhood penalty’, with a survey of 2,000 UK women finding that after they became mothers, almost half (44%) reduced their hours, more than a third (36%) left work completely and 15% returned to work in a lower grade or lower paid role. This all negatively impacts their ability to save for a pension at the same rate as men.
Of those surveyed, 38% said they would have worked more hours if childcare was more affordable.
Gregg McClymont, director of policy at The People’s Pension, says, ‘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.’
In the UK’s auto-enrolment regime, the first £6,136 of a worker’s earnings are not used to calculate pension contributions – removing this threshold would improve lower-earners’ ability to save.
* Read the report in full here: The Gender Pensions Gap: Tackling the motherhood penalty