PensionBee supports call on government to address ‘motherhood pension penalty’.
Today consumer organisation Which? published a report on pension Auto Enrolment, and is calling for new mothers to be given a £2,000 pension top-up to address the gender gap as part of reforms to the workplace pension.
The Which? report concludes that women who take time off to care for a child, are effectively hit with a ‘motherhood pension penalty’, potentially saving £15,000 less towards retirement compared to the average full-time working woman.
The analysis, conducted by the Pensions Policy Institute, found the average working woman who took time off for childcare duties might save £68,000 towards retirement compared to £83,000 for the equivalent female worker who takes no time off.
At the same time the average male worker might save £114,000 during their career – around 27% more than their female counterpart.
Romi Savova, CEO at PensionBee said: “I wholly support any pension contribution interventions for women to counteract the motherhood penalty. Financial systems have been set up in a way that systematically disadvantages women, and we now know that where a gender pay gap exists a gender pension gap will follow.
Today’s findings mirror 2018 PensionBee research which found that women have a smaller pension than men in every UK region. Our analysis of 5,098 savers showed that the average pension pot for women is £16,083, a figure significantly smaller than the average male pension of £23,416. This indicates a 31% UK pension gender gap between male and female pensions.”
|Region||Average female pension (£)||Average male pension (£)||Gender gap (%)|
*Source: PensionBee, based on a sample of 5,098 savers.
In order to redress the imbalance, Which? is calling for new mums to receive a £2,000 ‘New Parent’ cash injection, which with investment growth, will help address this gender pension gap in retirement. This supports PensionBee’s calculations that show the gender pension gap can be bridged with some manageable one-off contributions in a woman’s 20s, 30s and 40s.
Romi Savova, CEO at PensionBee said: “It’s not fair that a gender pension gap exists, but given the reality of lower pay as disclosed by most UK companies, it is clear that the government can do more, and the onus shouldn’t only be on women to make up the shortfall. Employers have a role to play too. It would make sense that companies with the highest gender pay gaps should also step up and be among the first to offer a £2,000 pension top-up to parents taking leave.”