Millions of Britons are at risk of a “disappointing” retirement savings shortfall due to the growing gender pension gap, shocking new analysis has found. Research reveals that women must secure an annual income of £74,000 from their mid-forties to accumulate pension savings equivalent to their male counterparts at retirement.
This figure represents more than twice the typical British salary of £35,000, according to calculations carried out by investment platform interactive investor.
Their analysis exposes a substantial pension wealth divide of £52,000 for women reaching 45, with females holding average retirement savings of £48,000 while males possess £100,000.
These findings form part of the platform’s ongoing examination of Britain’s gender pension inequality.
Britons are being reminded of a retirement savings shortfall
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The platform’s modelling demonstrates that women earning £74,000 annually from 45 to 68 must contribute £495 monthly, based on standard pension contributions of eight per cent comprising three per cent from employers and five per cent from employees.
Males earning the typical £35,000 require monthly contributions of just £233 to reach identical retirement wealth.
Both calculations assume five per cent investment returns and target a retirement fund of £450,000 by 68.
However, women on average salaries confront a devastating reality: their projected pension pot of £290,000 falls £160,000 short of men’s £450,000, despite identical earnings and contribution rates from age 45.
Women are being left worse-off in retirment
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PEXELSCamilla Esmund, a finance expert from interactive investor, identified multiple contributing factors towards the retirement savings shortfall.
She said: “Despite years of progress on the gender pay gap, it’s disappointing to see so many women still struggle to achieve adequate pension savings by retirement.”
Ms Esmund highlighted how women frequently take career breaks or reduce working hours during their thirties and forties for family care responsibilities.
This pattern results in diminished pension accumulation and increased financial pressure in retirement years.
“Our thirties and forties can be a significant time for us in terms of our earnings, but it can also be a time of competing financial priorities,” Ms Esmund noted.
Based on interactive investor’s research, these pension disparities intensify significantly when women reach middle age.
Despite these sobering figures, Ms Esmund emphasises that women can take decisive action to improve their retirement prospects.
“A core frustration on this topic is the fact that much of this feels out of our control,” she acknowledges, while noting Government commitments to address pension inequality through reform.
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Key strategies include increasing personal contributions to benefit from tax relief, where basic-rate taxpayers effectively pay £40 for every £50 contributed.
Checking employer schemes proves crucial, as some companies enhance their contributions when employees increase theirs.
Younger savers particularly benefit from compound growth, with an extra £50 monthly from age 25 potentially generating £42,000 by retirement.
Women should also monitor maternity pension arrangements and scrutinise fees that erode long-term savings.