Women have a smaller pension than men in every UK region

Mark James

by , Communications Manager

22 May 2018 /  

22
May 2018

Women have a smaller pension than men in every UK region
  • Gender gap is up to 76% in parts of the UK
  • Female pots almost 50% smaller once women reach their 50s
  • PensionBee calculates that women can bridge the gap with some manageable one-off contributions in their 20s, 30s and 40s

PensionBee has discovered a clear pension gender gap across the UK, which varies depending on region and a saver’s age.

According to the online pension manager’s analysis women sit on an average pot of £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, although the gap appears to be much wider in certain regions.

Region Average female pension (£) Average male pension (£) Gender gap (%)
England 16,390 23,755 31
East Midlands 11,513 17,011 32
Greater London 19,415 26,538 27
North East 8,209 16,531 50
North West 11,361 16,809 32
South East 20,638 31,220 34
South West 12,590 17,761 29
West Midlands 11,666 22,159 47
Northern Ireland 4,031 16,485 76
Scotland 15,737 23,291 32
Wales 8,552 17,417 51
United Kingdom 16,083 23,416 31

Source: PensionBee, based on a sample of 5,098 savers. More details on the sample are in the Appendix.

In Northern Ireland, for instance, women sit on a pot of £4,031 - a pension that’s a shocking 76% smaller than the average male pension in the same region (£16,485). This isn’t an isolated case, either, as pensions in Wales and the North East are also split significantly by gender. In both instances these regions indicate a pension gender gap of around 50%.

Interestingly, it appears that regional inequality is associated with gender inequality, as the regions of Wales, Northern Ireland and the North East have a lower than average UK pot size. This is further illustrated by Greater London having the smallest pension gender gap, and the second biggest average pension pot size (Appendix A).

PensionBee also examined the relationship between the pension gender gap and age, and discovered a disparity that increases significantly once women reach their 50s.

Age Group Female pension (£) Male pension (£) Gender gap (%)
Under 30 3,309 4,927 33
30 - 39 12,951 15,923 19
40 - 49 26,901 38,384 30
50 or over 31,254 53,449 42
Average 16,083 23,416 31

Source: PensionBee, based on a sample of 5,098 savers. More details on the sample are in the Appendix.

However, calculations by PensionBee suggest that the pension gender gap can be closed with some relatively straightforward interventions by women, namely contributing an extra £1,000 in their mid-20s, an extra £2,000 in their mid-30s, and an extra £3,500 in their mid-40s (Appendix B). Closing the pension gender gap may still not be sufficient for women to achieve a good retirement income though, according to the online pension manager’s retirement readiness analysis (Appendix C).

Speaking on the findings, Romi Savova, CEO of PensionBee said: ”It’s not fair that a pension gender gap exists, but given the reality of lower pay as disclosed by most UK companies, it is important that women take action early on to stop income inequality becoming a life-long burden. Targeted pension contributions are a great way to put women back on an equal footing and something every woman should consider as part of her retirement planning.”

Note to Editors

Romi Savova, CEO of PensionBee available for interview or comments.

For more information, please contact:

  • Jasper Martens
  • 020 3859 5788
  • press@pensionbee.com

Appendices

We compared 5,098 individuals with PensionBee pensions, who are broadly distributed like the general UK population between England, Northern Ireland, Scotland and Wales, albeit with a slightly higher concentration in London.

The sample includes 1,375 women, representing 27% of the sample and 3,723 men, representing the remaining 73% of the sample. The sample represents an age group of 22-63 years with an average age of 37. The average salary of the sample group is £46,883, so higher than that of the broader UK figure of £30,537, according to figures from Monster.

Appendix A: Average pension size by region

Region Average pension (%) Sample
England 21,730 4,544
East Midlands 15,531 435
Greater London 24,503 1,605
North East 14,513 303
North West 15,509 492
South East 28,183 991
South West 16,356 393
West Midlands 19,203 325
Northern Ireland 14,796 60
Scotland 21,482 337
Wales 15,473 157
United Kingdom 21,441 5,098

Source: PensionBee. Note many customers will have additional pensions to transfer to PensionBee, but we do not believe this impacts any particular region disproportionately.

Appendix B: Calculations on closing the gender gap

The gender gap can be closed with some relatively straightforward interventions by women, namely making an extra one-off contribution of £1,000 in their mid-20s, an extra £2,000 in their mid-30s, and an extra £3,500 in their mid-40s.

Age Group Female pension (£) Male pension (£) Gender gap (%)
Under 30 4,309 4,927 13
30 - 39 16,918 15,923 -6
40 - 49 38,206 38,384 1
50 or over 53,491 53,449 0

Source: PensionBee, based on 7% annual returns on additional female contributions. We have assumed 7% returns to represent an equity-oriented default fund.

Appendix C: Average salaries and replacement ratios in retirement, including the state pension

Using a prediction model, average pot sizes, average ages and average contribution rates, we forecasted the replacement ratio for each region. Specifically, we calculated how much of the annual salary for a region would be replaced through a private pension and the state pension of £8,279 when the individual receives it.

Region Salary (£) Replacement ratio (%)
England 48,344 26
East Midlands 32,303 33
Greater London 60,037 22
North East 37,819 32
North West 39,461 28
South East 54,151 26
South West 32,633 34
West Midlands 39,623 31
Northern Ireland 32,168 42
Scotland 35,427 35
Wales 37,442 34
United Kingdom 46,883 27

Source: PensionBee. We have assumed the pension grows at an annual rate of 5% and that annual charges are 0.7%. Inflation of 2.5% reduces the rate of return. It is assumed that the pot is converted into an annuity at the age of 65 and the annuity rate is 2%. The annuity expense ratio is 4%. We have assumed individuals take their 25% tax free lump sum prior to purchasing an annuity. The full state pension at current levels has been included in the expected annual income.

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