Submitted by Sestini & Co
| on Sat, 10/12/2019 - 12:57 | In Pensions
Women continue to face a gender pension gap, primarily because of having to take time off work to raise children and because they are still often paid less than their male counterparts.
For some, this is in
addition to other financial concerns such as insecurity in the workplace and less
female representation in managerial and leadership roles.
Whilst the introduction
of automatic enrolment has seen the number of women in the private sector with
a workplace pension double, the £10,000 threshold for automatic enrolment has
meant some women working part-time aren’t earning enough to qualify for these
Research published on
gender pay gap
Prospect, a trade
union that represents over 142,000 working people across the UK, has been
campaigning on the gender pension gap for many years.
Its latest published research, looking at the scale of the gender pension gap in the UK, is based upon an analysis of responses to the DWP’s Family Resources Survey. It shows that the percentage pension gap between men and women increased to 39.9% in 2017-18.
In its report, Prospect sets out a number of recommendations for the government
and industry to help reduce the gender pension gap, such as:
- Introducing an additional state pension credit worth
£2 a week for each year that someone is not working because they are caring for
a child under the age of 12
- Measures that make affordable childcare more widely available in order
to help people who want to return to work do so
- Reform of automatic enrolment from the earliest possible date so pension
contributions are paid from the first pound and the earnings trigger is
- Changes to the tax system to
resolve the problem whereby low earners in ‘net pay’ pension schemes do not
benefit from tax relief on their contributions.
According to the Office
for National Statistics (ONS), the gender pay
gap among all employees is 17.9%, driven by more women working in
part-time jobs, which are lower paid.
Freelancers are also particularly at risk of a low
income retirement. HMRC’s latest figures
show that the number of self-employed people paying into a personal pension has
stayed static over the last five years, despite the number of self-employed
people rising, and that the overall value of contributions in 2017-2018 was
less than in 2015-16.
Top up with private pensions
At the end of
last year, the state pension age for women came into line with men’s at 65, however,
the state pension age is already set to rise to 67 for men and women between
2026 and 2028, with further rises predicted.
It’s important to be mindful that preparing
for ‘worse-case scenarios’ – beyond what appears to be the current situation –
is prudent, as further rises to pension ages are mooted. In view of already
implemented and upcoming predicted changes to state pension age, it is
important to have private pension funds to protect against rises in the state
The need to go beyond state provision for
retirement was illustrated recently by the High Court’s decision on the
Backto60 campaign group’s case that the increase in state pension age from 60
to 66 for women born in the 1950s was discriminatory. The Court dismissed the
case, stating that the change in eligibility age was correcting “historic
direct discrimination against men” rather than discriminating against women.
Women born in the 1970s and onwards, are part
of the newer reality, where men and women are more accepting of the need to be
more reliant on private or company pensions in order to boost their standard of
living in retirement to what will be considered a reasonable standard.
can check the age you are set to receive the state pension here.
the state pension is set to rise by 4% from April 2020, it will still provide
many people with a less than comfortable retirement. Adding regular funds into
a private pension will help provide top up income and can grow tax-free into a
much larger amount long-term.
At Sestini & Co Group we can help your small business or employer set up a Small Self-Administered Scheme (SSAS). You can find out more about what we offer on our pensions page.
If you would like to discuss your pension
requirements, give us a call on 01761 241 861 or email us today.
We will be pleased to advise you or to invite you
into our offices in Paulton, near Bristol and Bath, for a consultation.