Higher and more frequent pay rises for men compared to women could result in a pensions gap of £142,603 ($191,500, €171,167) between the sexes, according to research by Fidelity International.
The study found that men are more likely to ask for a raise more than once (50%) compared to women (25%) throughout their working lives.
In particular, just 37% of women have asked for a pay raise, with a sheer 12% making subsequent requests.
If they are successful at securing a higher salary, men typically receive, on average, £733 more than women for each pay rise granted – £2,017 against £1,284.
In the table below, it shows the breakdown of Fidelity’s research and how the company has got to the £143,000 divide in pension savings.
|Average salary at 25 (Source: ONS) rising 1% in real terms each year||£25,066||£37,817||£12,751|
|Average pay rise every five years, rising 1% in real terms each year||£1,284||£2,017||£733|
|Salary at retirement (65) including pay rises||£49,682||£75,748||£26,065|
|Pension at retirement based on 8% salary contribution||£276,403||£419,006||£142,603|
Source: Fidelity International
Maike Currie, investment director at Fidelity International, said: “The factors that contribute to the gender pension gap are numerous and varied. But from our modelling it’s clear that even modest amounts can have a big impact over time.
“The difference regular pay rises – especially when also considering inflationary rises – is stark, with women’s pension pots on average left thousands of pounds short.
“Women typically have longer life expectancies meaning their pension pots need to stretch further, but lower pay, smaller pay rises, and career breaks all combine to create a significant shortfall. It’s imperative that more is done to support women with their finances and pension savings.
“While most women have heard of the gender pay and gender pensions gaps, many have not considered the gender pay rise gap and its effect on their income and pension contributions now and the impact on their retirement pot.
“This is why the subject of pay rises shouldn’t be a taboo. If you get paid less, you put less in your pension pot, let’s talk about this and address the glaring gaps today.”