New research has found the gender pension gap between men and women’s contributions is 35% for employees aged between 50 and 54, almost double the gap for 35 to 39 year-olds (18%).
Pension and insurance provider Aviva’s findings were based on employer and employee contributions of more than two million savers and retirees into workplace pensions.
The data also revealed that the gender pension gap increases to 23% for 40-44 year-olds, 29% for 45-49 year-olds and almost half (49%) for those aged between 65 and 69. According to the provider, this suggests a clear line in the sand around the age that women are often making milestone career and childcare decisions, and opting to work part-time.
Due to auto-enrolment (AE) thresholds, an employee earning £30,000 who opts to reduce their hours by 40% would see their pay reduce by 40%.
However, because of the lower qualifying earnings threshold under AE, Aviva discovered that an employee’s pension contributions would reduce to around 50% of their full-time value, and a worker earning £20,000 would see their pension contributions fall by more than 58%.
Emma Douglas, director of workplace savings and retirement at Aviva, explained that pension contributions are unlikely to be a deciding factor when considering working part-time, but it is important is that people understand the long-term impact when making that decision.
“This is crucial to good financial planning, as some people might consider upping their pension contributions, but this would have to be carefully balanced against disposable income. Another option some parents may consider is sharing the caring responsibilities to help spread the long-term financial impact.
“There is never a perfect time to increase pension contributions, but a phased approach should help to ease any sudden financial impact on employers and employees. Employers and employees need time to plan. The clock is ticking and the longer it does, the less there will be in the pension pots of part-time working women,” she said.