Data from one of the UK's largest pension plan providers, which has enabled more than 600,000 employers to automatically enrol their employees into a workplace pension, finds that women are contributing more than men – after adjusting for earnings. Given previous reports of a pension gender gap, this suggests women are working hard to bridge the divide.
The data, from the National Employment Savings Trust (NEST), reveals that while the median pension account balance is lower for women than it is for men, at £174 compared to £228 respectively, this is driven by earnings being lower. After adjusting for this, women not only have a higher median account balance, but also higher median pension contributions.
When looking at workers earning between £10,000 and £14,999 annually, for instance, median contributions for women were 26% higher, with account balances 20% greater than men's. This pattern holds across all earnings bands except the highest, where the differences are negligible.
Other findings show that fewer than 1% of members overall changed their investment options in 2017, which means almost everyone sticks to their pension provider's default fund rather than looking to see what works best for them. For example, a younger employee may want to invest in riskier funds, as they may generate higher returns, while someone approaching retirement will want to eliminate as much risk as possible in their investments.
Additionally, despite saving more than before the introduction of auto-enrolment, projections suggest people may still not be saving enough to replace their income in retirement, with a low-income 22-year-old predicted to generate an annual retirement income of just £3,000 in today's money.
Women may therefore be more active than men, and heading more steadily in the right direction, but this doesn't mean enough is being done to prepare for post-work life. Being in your workplace pension is one thing, but actively monitoring it to see if you're saving enough is another.
Even for those in their 40s, it's not too late to start a pension – our guide may be a good starting point – so those of us in our 30s or 20s certainly have time to ensure we're putting enough aside.
If you're reluctant to put funds straight into your workplace pension, then you could dedicate a savings account to later life funds instead. There's even the lifetime ISA to consider now, which allows you to save for retirement or your first home and offers a Government incentive of 25%.
Those nearing retirement may not have much room to add funds, but they should certainly make sure they think things through before taking their pension money out. As we reported yesterday, seeking advice can make all the difference when it comes to your retirement income.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.