“It is therefore policy in this area, such as equal pay for new mothers and fathers, that probably requires the most attention if we are to close the gap,” she said.
2016-2018 Article continues after advert | 2018-2020 | |||||
Average pot size male | Average pot size women | Gender pension gap | Average pot size male | Average pot size women | Gender pension gap | |
16 to 24 | £1,000 | £2,000 | -100.0% | £4,000 | £2,000 | 50.0% |
25 to 29 | £5,000 | £6,000 | -20.0% | £8,000 | £5,000 | 37.5% |
30 to 34 | £14,000 | £12,000 | 14.3% | £14,000 | £10,000 | 28.6% |
35 to 39 | £34,000 | £21,000 | 38.2% | £25,000 | £23,000 | 8.0% |
40 to 44 | £50,000 | £40,000 | 20.0% | £52,000 | £31,000 | 40.4% |
45 to 49 | £81,000 | £55,000 | 32.1% | £88,000 | £46,000 | 47.7% |
50 to 54 | £117,000 | £80,000 | 31.6% | £100,000 | £78,000 | 22.0% |
55 to 59 | £131,000 | £78,000 | 40.5% | £145,000 | £94,000 | 35.2% |
60 to 64 | £98,000 | £59,000 | 39.8% | £121,000 | £68,000 | 43.8% |
65 to 69 | £75,000 | £54,000 | 28.0% | £108,000 | £50,000 | 53.7% |
70 to 74 | £96,000 | £28,000 | 70.8% | £90,000 | £34,000 | 62.2% |
75+ | .. | .. | £100,000 | £30,000 | 70.0% | |
Source: ONS
Interactive Investor calculations found that women’s pension wealth would reach £80,960 between age 45 to 49, if their pension wealth continued to increase at the same rate as men between ages 35 to 49, compared to £46,000 in reality.
This means women pay a £57,960 motherhood penalty on average in their 40s, as childcare costs and the gender pay gap kick in.
Alice Guy, head of pensions and savings at Interactive Investor said: "Women have lower pension wealth than men at every stage of the journey, but a small gap often becomes an unbridgeable chasm for women in their 40s as a modest 8 per cent gender pension gap increases to 40 per cent for women aged between 40 to 44 and 48 per cent for women aged 50 to 54.”
Guy said women often “bear the brunt of childcare and household chores” and are more likely to work part time in their 40s.
“If women have children, the odds are stacked against them as some of the highest childcare costs in Europe combined with an increasing gender pay gap, make it harder for them to build pension wealth,” she said.
“When you’re struggling to pay the bills, lifting your head up and saving for the long term can seem an insurmountable hurdle, but it’s worth remembering that even small extra amounts paid into your pension add up over time.
“If you’re older and your kids have flown the nest, then it can make sense to up your pension contributions.”
Contributing an extra £200 per month from the age of 50 could add up to £64,104 by the time you reach 67, assuming 5 per cent investment growth.
Laura Suter, AJ Bell’s head of personal finance at AJ Bell added there are lots of ways women can boost their retirement savings – as logically they should actually have larger pots than men when they hit retirement age, as they are statistically more likely to live longer and so need their pension pot to last longer.
“From maintaining pension payments during maternity leave, to increasing contributions if you return to work part-time, or boosting contributions before you go off, there are lots of ways to ensure a career break doesn’t leave a huge hole in your pension savings,” she said.
