author: Lyn Ford, Chartered Financial Planner
In a recent report by Aegon*, there is both good and bad news regarding the size of the average pension pot held by people in the UK. The good news is that for many years the average amount has remained steady at around £30,000, but this has now leapt to £50,000 in Spring 2017. The bad news is that there is a significant difference in levels of savings between the genders. Men save on average £73,600 to retirement, whereas women only manage a third of this amount at £24,900.
Difference between men’s and women’s average pension pots
The table above clearly illustrates the scale of the pension gender gap and Aegon stated that this difference between average pot sizes for men and women could be down to recent auto-enrolment, in that more women than men are being newly subscribed to a workplace pension, and that they are at a more modest level of saving.
I think this is partially the case, because women employed in lower-paid jobs (both full- and part-time) are now saving for retirement under the mandatory legislation, whereas they previously would have been less inclined to contribute on a voluntary basis. In addition to this, I believe that many women’s pension savings are negatively impacted by leaving the working environment for extended periods of time, or completely in some cases.
Take action now to save more for your pension
I believe the important thing for women to do is change this situation now. Not only should women consider saving more to provide more adequately for their retirement in their own right, but they should also be aware that having a larger retirement fund presents clear benefits to those in a partnership.
Couples can benefit from maximising tax efficiency at retirement if both parties can use the whole of their nil rate band allowance. If it’s not possible to save more, then at least being more tax efficient could boost the end result.
So how can women go about changing the end result? Reviewing their overall pension contributions, both individually or collectively within a partnership, could identify how to improve pension outcomes. A professional pensions expert will be able to help those seeking to improve their situation.