5 ways a financial planner can help you close the gender pensions gap

The hit Netflix TV show The Crown charts the history of the royal family, and most would agree that the part of Queen Elizabeth II is integral to that story. 

Yet, Claire Foy, who donned the titular crown to play the role for the first two series, earned less than her male co-star Matt Smith, who played her husband Prince Philip.

According to Insider, after facing serious backlash about this, Netflix vowed that “going forward no one gets paid more than the Queen”. 

But the damage was already done, and this is just another example that proves financial inequality is still a reality for many women. 

This inequality extends beyond the gender pay gap as many women are also at a disadvantage when it comes to their pension savings.

The gender pensions gap is 35% in 2023

New research from the Department of Work and Pensions (DWP) shows that the gender pensions gap is still 35% in 2023. 

This means that, when they reached the “minimum retirement age” of 55, women had, on average, 35% less than men in uncrystallised retirement savings. 

The disparity in retirement savings could be, in part, due to the gender pay gap because women may be likely to earn less, meaning they cannot contribute as much to their pensions. However, there are several other factors at play too.

Women were historically less likely to pay into a private or workplace pension at all. Fortunately, auto-enrolment did go some way to improving this, as the DWP research shows that the gender pensions gap drops to 32% among those who qualify.

That said, there is still a significant gap, perhaps in part because having children disproportionately affects women’s careers.

Indeed, according to the BBC, the Office for National Statistics found that, in 2021, women with dependent children were seven times more likely to work part-time than men. Additionally, 15% said they are “economically inactive” because of childcare responsibilities.

This disruption to their careers means that women may find it more difficult to accrue pension savings.

The figures released by the DWP could support this, as they show that the gap is smallest for women aged 35-39 (10%) before hitting its peak for those aged 45-49 (47%). The gap may well widen at this stage of life because this is when the effects of a sustained career break materialise.

As a result, the effects of a career break coupled with the overall gender pay gap, mean that many women may not have the savings they need for a comfortable retirement.

Fortunately, working with a financial planner can help you potentially close the gender pensions gap and achieve your desired lifestyle in retirement.

5 ways a financial planner can help you close the gender pensions gap

1. Determining your goals

Determining your goals is normally the first step in any retirement plan. A financial planner will sit down with you and discuss the kind of lifestyle you want and what goals you have for retirement. This may include travel plans, home improvements, and what you want to leave to your family, for example.

Once you have a clear idea of the retirement you want, and what it will cost, your financial planner can tell you how much you need to save to achieve it.

Having this clear goal in mind may make it a lot easier to manage your retirement plan moving forward.

2. Managing your workplace pension contributions

Your workplace pension often provides much of your retirement income. However, a study from Standard Life found that women are less likely to increase their contributions than men. 

While 73% of women say they only pay the minimum contribution required by auto-enrolment, this drops to 58% among men. That means you may be missing out on valuable opportunities to build your pension pot.

Fortunately, a small increase to your monthly contributions could make a significant difference to your retirement savings later in life.

A financial planner can help you determine how much you can afford to pay into your pension, so you can maximise your contributions in a sustainable way.

3. Planning ahead for a career break

People have career breaks for many reasons, not just having children. You may decide to take an extended trip, go back into education, or you may need time away due to health issues, for example. 

Whatever the reason, planning ahead for this break may stop you from falling behind on pension contributions, so you can still meet the savings goal that you set with your financial planner.

There are several ways you can do this including:

  • Paying into a pension during your career break
  • Increasing contributions before your career break 
  • Asking your partner to make contributions on your behalf.

Your financial planner can discuss these options with you and incorporate them into your financial plan, so you can afford to continue contributing to your pension where possible.

4. Making investments

Investing your wealth can help it grow and protect it against inflation. For many people, investments are a key part of their retirement income, but studies show that women are less likely to have investments.

According to MoneyWeek, 74% of British women do not invest because they are nervous about it.  

Fortunately, a financial planner can help you understand investments and give you reassurance, so you can begin investing your wealth with confidence.

Additionally, feeling more confident about investing may encourage you to take more risks with your pension, so you potentially see more growth.

5. Protecting pension assets during a divorce

Divorce often disproportionately affects women and, according to Legal & General, you could see your income fall by almost twice as much as a man afterwards.

Women are also more likely than men to waive rights to their partner’s pension during a divorce, even though they are a joint asset and are often one of the most valuable assets involved.

This means women who may already have a smaller pension pot could miss out on vital funds because pension assets were not divided equally. Additionally, the reduction in earnings after a divorce can make it more difficult to continue making pension contributions.

The good news is, a financial planner can ensure that your pension assets are protected and divided equally during a divorce.

Get in touch

If you are concerned about the gender pensions gap, we can work with you to create a plan, so you can meet your retirement goals.

Please contact us on hello@ardentuk.com or call 01904 655 330. As an award-winning financial advice company that was a 2022 VouchedFor Top-Rated firm, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.

Get in touch

By talking about your current situation and listening to your aims, we create a personalised plan that will put you on a path to achieving your aspirations.

More articles

12 Jun 2024 News

A financial planner could help your clients avoid making these investment mistakes

Read more

12 Jun 2024 News

5 fantastic pieces of client feedback that demonstrate the benefits of working with Ardent

Read more