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The Gender Pay Gap

Recommendations to Overcome the Pensions Gap & Introduction to our Research 


On behalf of the Fintuity Team, it is a great pleasure to be able to present this report as well as some practical recommendations to overcome the growing pensions gap that has been highlighted by our analysts. 


Over the course of a number of months, our independent research has identified some serious gaps between UK pension incomes for men and women and we have outlined our findings and research in the report below. 


In response to the increasing media, industry and consumer interest raised as a result of our research, I thought it would be useful to outline some helpful tips, before we present the findings,  about how you and your family can take steps to improve your retirement income. 


Pensions are an incredible lifeline for us as we move from employment to retirement. We are living longer than before and women are more than likely to outlive men, so our years spent in retirement may be almost as long as our years spent working. 


 I think of pensions as a ‘pay it forward’ approach to looking after yourself, just like the kind customer who leaves money in the coffee shop for someone else’s benefit.  


Paying yourself in the future is a way of being kind to yourself in the years when you feel you should be relaxing and enjoying yourself after the hard grind is over; enabling your retirement lifestyle while you kick back and enjoy watching your grandchildren play.   


You really couldn’t give yourself a better gift.  


Although this article is written from research about women, traditional gender roles in the home are changing rapidly. I have applied traditional gender names in the following information, but whichever gender you are, if you are the lower earner, main house earner or carer, then many of these top tips apply to you too. 


Issues faced by Women:

    • Up to 26% less pension income than men in some years 
    • Many low earners have no pension at all 
    • Many have very low state pensions 


Reasons Why:

    • ‘Caring role’ – looking after dependent children and adults
    • Children;
      • Maternity leave affects pension contributions made through salary 
      • High childcare costs mean many choose to work part time if / when they do go back to work 
      • This impacts also the type of work done; many choose lower paid, local jobs which fit around nursery and school hours 
    • Auto-enrollment rules in the workplace do not favour low earners or those who work 2 jobs to make ends meet;
      • You must be 22 and earning at least £10,000 a year from one employer (there is some flexibility here but this is the basic rule) 
      • If you are not eligible for auto enrolment you may opt to pay into the scheme but your employer doesn’t have to pay in on your behalf – missing out on contributions from the employer 


Fixing it:

    • Start paying into a pension as early as you are able, even if it’s only £20 a month. Something is better than nothing. As a rough guide, to keep up with the men, if you start your pension at age 20 you’ll need to pay in an extra £1300 a year more than your workplace pension, for the rest of your working life. From age 30 it’s £2000 a year, age 40 it’s £2900, and age 50 it’s £5300 a year.  You can see from these figures that the earlier you start, the less it costs you each year.  Teach this to your children. 
    • Choose autoenrollment, where 8% of your salary will be paid into a pension each year.  Talk to your HR department about maximising the money your employer will pay in based on your level of contribution; you will be surprised at how much some employers will offer. If you want to save more than this, have a conversation with a financial adviser who can show you the best way of doing so. 
    • Pay national insurance for a minimum of 10 years up to 35 or more years 
      • Earn over £183 a week 
      • Pay self employed class 2 and 4 
      • Look at your national insurance contributions online, and consider a top up if you’re able. Do check this with the Department of Work and Pensions as for some people, extra payments may make no difference at all. 


Other things that you can do: 

    • Talk to your significant other.  Might they be willing to help out with extra contributions for you? Tax uplifts on personal pension contributions are very worthwhile having; you get an extra 25% of your contribution added by the Government. Do take financial advice though; nobody wants an unexpected tax bill for paying too much in! 
    • Consider giving your children a helping hand by paying up to £3600 a year into a personal pension in their name. 
    • Make sure your significant other has filled out an expression of wish form in your favour from their own pension scheme.  This means that you will be entitles so some or all of their pension if they pass away before you. This is especially important if you are not married, or if your partner has been married to someone else before you.  You can inherit a pension, and you can pass one down to your children. 
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