Men save an extra £142,603 than women by retirement age because they receive more frequent and higher pay rises, a new study has shown.
Women retire with hundreds of thousands of pounds less because as men are given £733 more with increase in pay, according to research by investment firm Fidelity. The average pay rise is 57pc higher for men who received a £2,017 boost while women were given just £1,284.
The study showed this led to a £12,751 gap between men and women’s average salary by the age 25. This grows to £26,065 by retirement age as men receive more frequent and larger raises throughout their careers. Lower earnings mean women pay less into their pensions each year, which compounds into a shortfall of £142,603 over their careers, as the table below shows.
Men were far more likely to ask for a pay rise, the study said. Half of men directly request more money within their working lifetime while two thirds of women never ask for a raise. In addition, higher life expectancy for women has meant they need to stretch their pension pots over a longer period despite having lower pay, smaller pay rises and career breaks.
Maike Currie, of Fidelity, said: “Even modest amounts have a big impact over time. This is why the subject of pay rises shouldn’t be a taboo. The difference regular pay rises make – especially when considering inflation – is stark with women’s pensions left thousands of pounds short.”
Women also miss out on tens of thousands of pounds by taking time out of work to look after their children. The “motherhood pension penalty” cost £60,000 for those who take a five-year career break during their thirties. Combined with the gender inequality of pay rises, women are £201,396 worse off than men, Fidelity calculations showed.
Men were also more likely to ask for a promotion, the research found. Only one in 10 women has asked for a promotion multiple times during her working life.
Britain’s gender retirement gap has widened in recent years, with women an extra £27,000 poorer in retirement than men as a result of the pandemic. Women’s pension pots are £183,936 smaller on average, according to a report by More2life, a lender, and the Centre for Economics and Business Research, a think tank.