State pension freeze: Lord Jones raises issue of ‘unfairness’
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Analysis of the company’s data from approximately four million pension scheme holders found that there is a disparity between pension pot sizes between men and women, even at the start of a career.
This initial gap of 17 percent remains unchanged until both genders reach their thirties, whereas it doubles to 34 percent by the time they are in their forties.
From there, this gap expands to 51 percent in the fifties age bracket, and then to 56 percent at retirement.
As part of their study, Legal & General examined the size of pension pots of more than 37,000 people in the UK who retired last year.
They found that the average size of a man’s pension pot at retirement is £21,000 compared to £10,000 for a woman.
With this being a difference of over a half, the study went on to find that the difference of pot size has major influences on people’s decisions upon retirement.
For example, around 92 percent of women decide to take their pension in cash compared to 86 percent of men.
Furthermore, only seven percent of women in the UK chose a drawdown compared to 12 percent of their male counterparts.
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Even in female dominated industries, the firm found that the pension gap continues to be just as evident.
Across the country’s social care sector, the study revealed that 85 percent of pension scheme members are women, however the average woman’s pot size is 47 percent smaller than the average man.
Rita Butler-Jones, Co-Head of DC at Legal & General Investment Management, warns that this gender disparity is an issue which needs to be addressed urgently.
Ms Butler-Jones said: “DC pensions have grown substantially in recent years, with auto-enrolment becoming a huge success.
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“However, much like the Gender Pay Gap in wages, the Gender Pension Gap is fast becoming an issue which needs to be higher on our radars as an industry.
“This analysis of more than four million of our members reveals the extent of the gender pension gap in the UK – a gap that exists right from the very beginning of a woman’s career and accelerates as she approaches retirement.”
She added: “The decision to take a career break to raise a family has a clear impact, though there a number of other factors at play here including lower pay relative to male peers at all stages of a woman’s career, a lack of pension contributions when she is away from the workplace, and the potential impact that raising a family has on a woman’s career progression.
“Women are also more likely to face financial struggles following a divorce from their partner and are significantly more likely to waive their rights to a partner’s pension as part of their divorce.
“This is particularly true for older women, with one in four divorces occurring after the age of 50.”
Stuart Murphy, Co-Head of DC at Legal & General Investment Management, noted that the pension gap is an issue which will not be readily solved.
Mr Murphy said: “Events over the last year have also shone a spotlight on those who juggle day jobs with keeping a household running.
“Changing social and workplace attitudes should help begin to level the playing field in terms of responsibilities, helped by the increasing acceptance of more flexible working patterns.”
He added: “The gender pay and pension gap is a complex issue that will take time to solve.
“We need to see increased support from the state and employers in levelling the playing field by looking at issues such as lowering the eligibility age and raising the minimum contributions for auto-enrolment, as well as addressing the pay gap for part time employees.”
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