Pension Gender Gap Creates $59,000 Shortfall for Women

Women can expect to be shortchanged by their pensions to the tune of nearly £47,000 ($59,000) over their career, according to a new study released by Zurich Insurance.

The inaugural Zurich Workplace Savings Barometer  found a significant gap between how much money men and women receive in employer pension contributions over their working lives.

The shortfall has been attributed to a combination of factors that can disproportionately disadvantage women: The gender pay gap, which leads to a lower value of employer contribution as a percentage of salary, the fact that women are more likely to take career breaks to raise a family; and because men typically work in sectors with more established—or more generous—pension schemes.

The study, which analyzed more than 250,000 pension plans, found that since 2013, women have received, on average, 1% of their salary less in employer pension contributions each year when compared to men.

In 2016, women under 35 received, on average, £217 ($272) less in employer pension contributions than men in the same age range. Women between 34 and 44 received £594 less than men; women between 44 and 54 received £1,287 less, and women between 55 and 64 received £1,680 less. 

Additionally, between 2013 and 2016, men benefitted from pension contributions of 7.8% of their salary each year from their employers, compared with 7% for women. This creates a double whammy for women, who already lag behind men in salary, which meant that the value of the employer pension contribution was £3,495 ($4,387) for men and £2,489 ($3,124) for women. With wage growth taken into consideration, the difference could translate to a shortfall of £46,689 for women by the time they reach retirement.

“The impact of the gender pay gap on women’s pension pots is no secret, but this difference in the contributions that they receive from their employer presents a serious–and growing–problem,” said Rose St Louis, Head of Partnership Development – Zurich UK Life at Zurich Insurance, in a statement.

“We can’t ignore a £47,000 shortfall,” she said. “Workplace engagement and guidance has a central role to play in helping women make the most of their saving potential while they are working full time.” 

There were also more men in the UK.-wide analysis (154,999 vs. 95,262 women), indicating that, even before the gap in salaries and contributions levels has an effect, there are significantly more men receiving pension contributions.

By Michael Katz