The impact of the gender pension gap has been revealed in new research which shows that women have lower pension pot sizes in every age bracket, with the situation significantly deteriorating as they approach retirement.
The research, which analyses data from approximately four million pension scheme members of insurance firm Legal & General (L&G), shows there is 'always a difference' in pension pot sizes between genders, even at the start of men and women’s careers.
This initial gap (17%) remains largely unchanged until men and women reach their thirties, but doubles to 34% by the time they are in their forties, the firm said. The gap increases to 51% in the fifties age bracket, and then to 56% at retirement.
L&G also looked at the size of pension pots of more than 37,000 people in the UK who retired in 2020. Of these, the average size of a man’s pension pot at retirement is £21,000 compared to £10,000 for a woman – a difference of more than half.
The analysis reveals that the difference in size of pot has a significant influence on the choices being made at retirement. 92% of women choose to take their pension in cash compared to 86% of men, while only 7% of women consider a drawdown compared to 12% of men.
The issue seems compounded by the fact that even in industries where women are more heavily represented in the workforce, the pension gap remains just as stark.
For example, in the senior care sector, the research shows that 85% of pension scheme members are women, yet the average woman’s pot size is 47% smaller than the average man’s (£8,040 current male average pot size).
Rita Butler-Jones, co-head of DC at Legal & General Investment Management, said: “DC pensions have grown substantially in recent years, with auto-enrolment becoming a huge success. However, much like the Gender Pay Gap in wages, the Gender Pension Gap is fast becoming an issue which needs to be higher on our radars as an industry.
"This analysis of more than four million of our members reveals the extent of the gender pension gap in the UK – a gap that exists right from the very beginning of a woman’s career and accelerates as she approaches retirement.
"The decision to take a career break to raise a family has a clear impact, though there a number of other factors at play here including lower pay relative to male peers at all stages of a woman’s career, a lack of pension contributions when she is away from the workplace, and the potential impact that raising a family has on a woman’s career progression."