26th October 2015
Women in the UK are setting their sights significantly lower than men when it comes to how much money they need to live comfortably in retirement.
A study from Retirement Advantage, found that the disparity is a consequence of the gender pay gap that persists in people’s working lives.
When asked to estimate, men over 50 years old feel they need £1,593 per month to live comfortably in contrast to women of the same age who thought £1,340 would be enough.
READ MORE: David Cameron to tackle gender pay-gap
This equates to a difference of over £250 each month – more than 15 percent. In April this year the ONS found that the current gender pay gap meant men were paid on average 9.4% more than women in the UK.
Andrew Tully, pensions technical director at Retirement Advantage, commented: “Gender income inequality persists in our society. Women have markedly lower expectations than their male counterparts when it comes to retirement income. This view is almost certainly shaped by generation upon generation of gender pay inequality.”
Retirement Advantage’s analysis also revealed that men save more into their pensions each month. Women over 50 said that on average they were contributing £131 each month compared to £180 for men.
How people plan to get advice on their retirement finances also has a bearing on how much they save into their pension. People planning to use a financial adviser are contributing £225 per month, around £70 per month more than those who are thinking of consulting Pension Wise, or chatting to friends or family.
Tully added: “The gap between men and women’s pay has a dramatic effect on contributions to pensions. Although the pay gap is around 10 percent, the difference in savings is much greater. This is most likely due to lower disposable incomes hampering women’s ability to save.
“Whatever your financial aspirations for retirement, take advantage of any pension payments on offer from your employer. And taking financial advice is key. I think it’s telling that the people planning to use an adviser when they retire are also the ones who are saving more for their retirement. They’ve likely received advice and are aware of what they need to save in order to retire in comfort.”
On Sunday, Prime Minister David Cameron and Women and Equalities Minister Nicky Morgan announced new measures to eradicate gender inequality in the work place.
Under the plans, the government is pledging to eliminate all-male boards in the FTSE 350 and force larger employers to publish information about their bonuses as part of their gender pay gap reporting