According to the latest data, a single mother retiring now averages a pension fund of £18300. A man retiring will average a pension fund of £156,000. This is the gender pension gap in its starkest. Women are often penalised by the years lost when childbearing and rearing. However, what is significant is that the gap has increased to 39.9%.
The problem of gender
What makes this gender pension gap so tricky is the inability of women to do much about it. Also, it is challenging because, according to Prospect, there is no apparent government attention on the difference, nor any policies that seem to seek to address it.
The gaps are not just apparent in occupational pensions, such as the Teachers’ Pension Scheme. There is also an inequality in the average state pension awarded. This difference is because of the cumulative impact over time of women earning less than men and because of the breaks from paid employment or increased part-time work for women.
It is thought that the expense of childcare is a direct reason for this disparity. It is also believed that people choosing to rear children rather than work should gain credit towards their pension as a reward for choosing family over the workplace. Organisations such as Prospect believe there should be an independent commission on the pensions gap, as a means of countering gender inequality.
What can you do?
Some would agree with the assessment of Prospect, that there is little women can do, and there is a need for government action. However, others offer hope of taking control. Being aware of your pension contributions and the size of your fund is vital. Then, if you perceive the fund to be too low, you can then seek to pay additional amounts to increase the value of your pension for later life.
You can speak to an Independent Financial Adviser who should be able to help you take back control of your future prosperity. No matter your gender, you should be cognizant of your future wealth and whether you need to do more to increase your levels of security.
The content in this article was correct on 17th August 2020. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on your teachers’ pension scheme, as well as financial matters in general. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.