A young woman in her twenties will typically retire with £100,000 less in her pension pot compared with her male peers, and would have to work almost 40 years longer to accumulate the same income, new research suggests.
Over the first 15 years of their careers, women on average save about £2,200 a year, compared to £3,300 for men, with the difference only widening over a lifetime as wage increases lead to "significant inequalities in retirement income.”
The research found that a woman who is currently in her 20s will have to work 37 years longer than a man of the same age in order to accumulate the same income.
‘The gender pay gap also plays its part’
Addressing reasons behind why women may have a significantly lesser amount in their pensions than men, Scottish Widows said: “There are lots of reasons that the average 20 year old woman is on course to have £100,000 less in her pension than a man the same age.
“The amount people save into their pension is generally a percentage of their salary or income. So anything that reduces your income will directly affect your pension.”
The company said that women are “more likely to face life events which negatively affect how they save for their retirement,” and are “more likely to take time out to raise a family, manage caring responsibilities, be in lower paid roles or work part time.”
However, Scottish widows also said that “the gender pay gap also plays its part so it’s really important to raise awareness around how these challenges can impact retirement planning, but we’re here to help and there are things you can do to help reduce the gender pension gap.”
Jackie Leiper, managing director of pensions at Scottish Widows, said: "We know that young women have been some of the hardest hit by the short-term financial impact of the pandemic and this has only exacerbated the challenge of reaching pensions parity.
"At the same time, caring responsibilities and high childcare costs are keeping women out of the workforce, lowering their contributions and denting their pension pots."