A closer look at the numbers lays bare the bleak reality of the gender pensions gap.
Figures from the Office for National Statistics show retirement wealth has almost doubled over the past decade, but a closer look at the numbers also lays bare the bleak reality of the gender pensions gap.
The statistics show that the value of private pensions has jumped from £3.6 trillion to £6.2 trillion over the past decade – a rise of 72%. The big driver behind this has been auto-enrolment (introduced in October 2012), which has today resulted in more than 10 million employees now contributing to a workplace pension.
Steven Cameron, pensions director at Aegon, notes: “The percentage of adults below state pension age actively contributing has increased from 43% to 53% over the last 10 years, boosted significantly by automatic enrolment.”
While the government initiative has been in a success in this respect, there are plenty of challenges that still need to be tackled.
First, for many the minimum threshold for auto-enrolment contributions will not be enough to secure a comfortable retirement.
Second, a key cohort of workers, the 4.8 million self-employed people in the UK, have no such scheme. As a result, the fear is that many are woefully under-saving for the future.
Cameron adds: “There are big differences in where this wealth sits. Almost half (48%) is held in pensions which are already in payment, which will be mainly made up of people who have already retired. Many of today’s retirees will be benefiting from the golden age of generous defined benefit pensions, which are very rarely available to today’s workers, particularly in the private sector.”
The figures also show a continuing pension gender gap. Emma-Lou Montgomery, associate director for Fidelity International, points out that the report shows more men under 65 years old had active private pensions than women of the same age, 56% to 51% respectively. In addition, she adds that the wealth in women’s pension pots is significantly lower, with a savings gap of over £5,000.
She continues: “This is particularly concerning when you take into account the fact that women are likely to need their savings to last for a longer period of time and may be subject to career gaps.”
The Great British Retirement Survey, carried out by Moneywise, the sister publication of Money Observer, also laid bare the gender pensions gap. One key finding was that more than one in 10 women (12%) expect a household income below £10,000 a year at retirement, compared to only 2% of men. At the other end of the spectrum, one in five men (19%) expect an income north of £50,000, but only 8% of women are that confident of their retirement income.