Men and women could have a pensions gap of £142,603 based on higher and more frequent pay rises for men according to new modelling by Fidelity International.
The study found that half of men have requested a pay increase at some point in their careers, and a quarter have requested more than one raise over the course of their careers. Only 37 per cent of women have ever requested a pay increase, with only 12 per cent making a second request. Men typically receive £733 more than women for each pay increase granted, £2,017 vs. £1,284.
According to Fidelity’s model, which is based on assumed workplace pension contributions of 8 per cent of salary, this disparity in pay raises could result in men having £142,603 more in their pension pots than women over time.
Fidelity also examined how the gender pay gap widens when women take a career break. A woman who takes a five-year career break in her thirties will retire with a pot of £217,610, nearly £60,000 less than a woman who works full-time her entire career- the gender gap widens to £201,396.
Fidelity International investment director Maike Currie says: “The factors that contribute to the gender pension gap are numerous and varied. But from our modelling, it’s clear that even modest amounts can have a big impact over time. The difference between regular pay rises – especially when also considering inflationary rises – is stark, with women’s pension pots on average left thousands of pounds short.
“Women typically have longer life expectancies meaning their pension pots need to stretch further, but lower pay, smaller pay rises, and career breaks all combine to create a significant shortfall. It’s imperative that more is done to support women with their finances and pension savings.”
Currie adds: “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 the impact on their retirement pot. This is why the subject of pay rises shouldn’t be taboo. If you get paid less, you put less in your pension pot, let’s talk about this and address the glaring gaps today.”
