The gender pension gap exists in every UK industry

We often hear about the gender pay gap, but not as much is written about the gender pension gap, despite so many women in the UK finding their pension pots to be significantly lower than men’s – in some industries by up to 59%.

It seems, according to a new study by Legal & General, who compared over 4 million people’s data, that every industry sector is affected including those who are predominantly more female biased in terms of employees, ie healthcare, later life care and the pharmaceutical sector.

You could argue that with women taking career breaks to raise families, working at less senior corporate levels, or choosing to work part time, that there is a degree of inevitability that women’s pensions pots will be lower, however there is also a general lack of confidence in how women manage their finances.  28% of women, versus 48% of men feel confident in making financial decisions and 38% of those who stopped working or reduced their hours do not have a grasp on how this will financially affect their pension contributions.

Women, ironically, tend to have a longer life span than men, and will therefore need a higher amount of capital to fund their retirement.  Add to this the estimated divorce rate in the UK of 42%, and women are often faced with making difficult decisions between losing the former family home or fighting to retain a percentage of their former spouse’s pensions, which are more often than not, treated as a second thought and not a priority throughout the divorce process. Currently only 1 in 3 divorces receive any form of financial orders, and of these, only 12% include pension sharing orders.  Women particularly are far more likely to trade pension capital against capital currently owned in property so they and their children can remain in the security of their home; however they risk losing longer-term stability especially as the pension values declared at the time of divorce can appear vastly less than the true income that will be paid out during retirement.

Although a recent Government briefing paper has recommended pensions become a compulsory part of divorce proceedings, in the meantime it is down to the individuals to educate themselves and take financial advice before making big decisions.  Similarly, all providers, schemes and the Government itself need to work closer together to support women in how they can increase their retirement savings and reduce their reliance on the state pension.

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