Higher pay rises for men than women could result in a gender pensions gap of £142,603, according to new findings.
Research commissioned by investment solutions firm Fidelity International revealed that men typically receive £733 more than women when their salary is increased.
Fidelity’s modelling showed that a 25-year-old man on an average salary of £37,8173 who receives a pay rise every five years could see his salary grow to £75,748 by retirement age. In comparison, an average woman’s salary would only grow from £25,066 to £49,683 over the same period.
Using assumed workplace pension contributions of 8% of an employees’ salary, this disparity could leave men with £142,603 more in their pension pots than women.
The impact could in fact be even higher as men are more likely to ask for a pay rise, according to the research, which was carried out last October among 3,000 UK adults.
This found that 50% of men have asked for a pay rise at some stage in their career, with 25% making more than one request, while just 37% of women have ever asked for a salary hike and only 12% made subsequent requests.
Furthermore, a woman taking a five-year career break during her 30s will have a pension pot of £217,610, almost £60,000 less than a woman in full-time employment throughout her career. The gender gap grows significantly if a woman take a five-year career break to £201,396.
Maike Currie, investment director at Fidelity International, said it is imperative that more is done to support women with their pension savings, especially as they typically have longer life expectancies, meaning their pension pots need to stretch further.
“While most women have heard of the gender pay and gender pensions gaps, many have not considered the gender pay rise gap and its effect on their income and pension contributions now and their retirement pot,” she said. “If you get paid less, you put less in your pension pot.”