The gender pension gap for over-55s widened by 17 per cent (or £26,673) in 2020, as the “disproportionate” effects of Covid-19 took their toll on women’s finances.
Last year the gender pension gap grew from £157,263 to £183,936, according to data published by the Centre for Economics and Business Research and equity release lender More2life.
As a result, the findings suggest women had to work an average of 54.5 years to reach the same level of pension savings a man could reach in 40 years.
They also found men earnt pension incomes which were 38 per cent higher than women during retirement, equating to approximately £478 a month.
Dave Harris, More2life’s chief executive, highlighted that this was “despite the fact that women actually save a higher share of their income into pension funds”.
The report found women contributed 5.1 per cent to their pension each year, with a further 4.3 per cent contributed by their employers. This compared to the 4.8 per cent of earnings and 3.5 per cent employer contributions men put into their pension pot each year.
The report cited the “disproportionate impact the Covid-19 pandemic has had on women” as a reason for the widening gender pension gap.
It concluded: “Unfortunately, these challenges look set to continue as the longer term financial impact of the Covid-19 crisis is likely to worsen their ability to fund or save for later life.”
The research found that of the 1,016 UK adults it surveyed, 30 per cent of women aged 55 and over said their financial situation has worsened to some degree since the pandemic began. This is compared to 24 per cent of men in the same demographic.
And while the findings suggested women were more likely to take out debt than men, they also suggested a third more men than women were in a position to take out debt on larger purchases in retirement, such as a car.
“These figures are concerning and back up our own research showing women are struggling to recover financially in the current environment as a result of redundancy and furlough,” said Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown.
“Our research showed 62 per cent of women worried about being able to afford to pay enough into their pension in comparison to 57 per cent of men.”
Morrissey said there were things women could do to “plug the gap”. She suggested women continue to contribute to their pension after the age of 55.
“You should also check with your employer to see if they will match any further contributions as this can give your retirement planning a real boost.”
Alongside the short-term impact of Covid-19, systemic drivers such as the ongoing gender pay gap continue to fuel significant gaps in retired wealth.
The report found 40 per cent of women did not have pension wealth altogether, compared to 25 per cent of men who said the same.
Another reason for this gap, as well as the gender pay gap, was the disproportionate effect of divorces on women.