Women and the pension savings gap – why?

Men & Women Pension Gender Gap graphic

Sarah Austin, Cambridge-based Independent Financial Adviser from Martin-Redman Partners, talks about the gender pensions gap, why it exists and things women (and men!) can do to reduce it.

There has been a fair amount of press recently about women and pensions; with one study by the Pensions Policy Institute finding women, on average, only have a third of the amount saved into pensions in their early 60s, compared to men. The study reports a man will have an average of £156,500 and women £51,100 - which is a significant difference.

But why?

The study reported several reasons; but the main two were:

·        Women ‘typically’, although not always take time away from work or work part-time once children come along. The study found this contributes to almost half of the difference. Contributions to a workplace pension are made on a percentage of earnings basis so, if you are earning less at work, the percentage saved via workplace schemes is less (or will stop completely if employment is left).

·        The study found women on average earn approximately 18% less compared to their male counterpart. Over an individual’s working life, the pay differential builds and contributes to a reduction of pension wealth of 28%.

On top of this, the study reported that women live on average 3.7 years longer than men, meaning their pension pots need to last longer. To draw the same pension income as a man throughout their retirement, a woman needs to have saved around 5% - 7% more than a man by retirement age to allow for the fact they live longer and need pension income for longer.


Positive action – taking control

It is not all bleak and bad news; with some financial planning there are several things women (and men too) can do to increase their pension savings. In this case; making a plan and taking action makes a real difference:

1)     Start saving for retirement as early as possible – your money can benefit from growth on growth – compound interest really does make a huge difference

2)     Review your existing pensions; dig out ones from past employers, your old personal pensions and current plans. The benefits of reviewing your pensions are it can:

·        Highlight any shortfalls in good time. If you know a rough income you will need when you come to retire, you can plan backwards to work out a monthly contribution. Doing this sooner rather than later gives you longer to save more monthly to make up any shortfall.

·        Ensure your pensions are invested to your views on risk across a diversified portfolio of funds; where you are not taking too much risk (and worrying about this), or not enough (and potentially missing out on potential growth).

·        And following on from the last point; help you retire sooner, or choose to work flexibly or part-time!

3)     If you are on a career break (and if budget allows) consider continuing to save into a pension. Even if you are not earning you are still able to receive 20% tax-relief on your contributions up to £3,600 per year. So, for every £100 your save into your pension; you only contribute £80, with the government adding £20 for you. Make use of this tax-benefit and keep saving if you can.

4)     Speak to an Independent Financial Adviser who can help you work out your retirement goals; when do you want to retire? How much income would you like? Is your pension invested in the right funds based on your attitude to risk? If you have several pensions is it in your best interests, or not, to consolidate them?


Independent Financial Advice
An Independent Financial Adviser (IFA) can help you plan how much you should be saving each month to reach your retirement goal and recommend a diversified portfolio of funds suitable to you and your feelings on risk.

An IFA will also be able to help you better understand pensions and explain in jargon-free language what is often a complex and technical area. In this case; knowledge is very much power to make change and feel more in control of your retirement.

Arrange a meeting to discuss your retirement and pension planning
Please get in touch with us to arrange an introductory meeting, at our cost. We have both male and female advisers who can advise you on your pension planning.  

Contact: info@martin-redmanpartners.co.uk or call on 01223 792 196.

About Martin-Redman Partners  

We are a team of experienced Independent Financial Advisers (IFAs) who can advise on your personal or business financial arrangements. We have been building trusted relationships with clients for many years by articulating clear and tailored recommendations in areas ranging from investments to retirement planning, to complex estate planning advice. 

We offer expert independent financial advice throughout Cambridgeshire, Leicestershire, Suffolk, East Anglia and the South East.  Many of our clients are within, or are in the surrounding areas of Cambridge, Grantham, Stamford, Bury St Edmunds, Frinton on Sea, Ely, Peterborough, Huntingdon, Cambourne, Newmarket, Soham and Oundle.


The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction. 


We provide independent financial advice on investments, pensions, inheritance tax planning and protection. We work with private individuals, businesses and professional introducers, such as accountants and solicitors, to ensure our clients financial advice needs are met.

Martin-Redman Partners