In February I wrote about how women are penalised with smaller pension pots because of the disparity in pay they throughout their working lives. This was backed up by research from the Office of National Statistics (ONS) which stated women earn less which in turn means they are able to contribute less to a pension pot.
And research published last week found women retiring this year will receive the lowest annual pension income since 2008, and receive £6,500 less than men, a report suggests.
The research found that the disparity in men as women’s annual income post retirement has actually increased by £750 since 2012.
The annual survey conducted by Prudential revealed average income for women is 64% that of men’s. It also found that women’s annual income after retirement is on average less than two-thirds (64 per cent) that of men.
This isn’t all. The situation is serious because following a high point in 2009 women’s pensions has entered a steady decline of £500 each year. Men meanwhile have enjoyed an increase this year with an increase of their income of £250 (on average).
It is well documented that the economic downturn has had a significant impact on female earning capability and this has led more women to take on part-time roles in order to still be able to contribute; but the obvious consequence has meant women have not been able to contribute as much as they would like towards their pension pot. Essentially women put family needs before their own.
The introduction of auto enrolment, where employers are obliged to enter all employees into a pension scheme may help alleviate the problem a little. However, in reality, and as a spokesperson for Prudential pointed out when interviewed by the Times newspaper on this subject last week, the gulf in retirement incomes has grown and it’s continuing to do so. The spokesperson predicted the gap would not disappear “for years to come”.
The Government promises the controversial single tier pension scheme will benefit women, but the above indicates significant and very worrying problems in the short to medium term and possibly beyond that.
Auto-enrolment contributions are meant to protect employees retirement that may not be considering contributing to their pension, such as women. The pension solution will at the very least help employees consider their future in retirement and employers should be providing communications on the auto-enrolment contributions to prevent employees opting out.