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Women losing out on pensions even before they start working

According to new research, parents and grandparents are far more likely to save for boys than for girls, meaning the gender pension gap can start from birth.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

While it’s a sad but well known fact that women’s pension savings tend to fall behind men throughout their working life, new research has shown that the gender pension gap starts long before women start working.

In data obtained through a Freedom of Information request submitted by Hargreaves Lansdown, HMRC revealed that parents and grandparents have been much more likely to save for their sons and grandsons than their daughters and granddaughters when it comes to pensions.

How big is this problem?

One positive aspect of the data is that the number of subscriptions to Junior pensions has increased by over five times over the 4 years from 2013 to 2017 (the most recent available figures).

However, the data also revealed that while approximately 20,000 boys aged 15 or under received contributions into a pension in 2016/17, only 13,000 girls aged 15 or under had the same. This is a difference of 54%, showing that the gender inequality in pensions starts even before men and women begin working.

Women’s savings when they start working are rightly blamed on the gender pay gap and the greater role in looking after the family, but the reason for this discrepancy between boys and girls is not entirely clear.

What can I do about it?

Well, the obvious choice is to start early for your child, whatever their gender. Investing from a young age can give a huge boost to their pension.

In fact, contributing just £100 per month until 18 could boost the pension for a child by roughly £130,000 by the time they reach retirement*. Taking into account tax relief (£5,400), this would only cost £21,600 in total over the child’s lifetime.

Choosing a pension over a Junior ISA for your child’s savings can provide reassurance – as with any pension, your child can’t normally access it until age 55 (57 in 2028), so you don’t have to worry about them going on a big spending spree as soon as they hit 18.

It also gives the pot time to grow for longer, and could take pressure off your kids having to increase their contributions at the beginning of their career, when pennies are often tight.

More on Junior SIPPs

What about the rest of the gender pension gap?

Women in their early 60s currently have on average £100,000 less than their male counterparts in their private pension pots.

So even if you’re not a child but you want to beat the gender pension gap, why not take a look at your current contributions?

You can talk to your employer about increasing your contributions. Some employers may offer to match your contribution, which could make it even more worthwhile.

If you’re already making the most of any employer contributions on offer, you can open a SIPP (Self-Invested Personal Pension) and set up a regular direct debit or make one-off contributions whenever you can. In the HL SIPP, you can choose from a wide range of options and have control of your investments.

Remember, you can’t usually access money in your pension until age 55 (57 from 2028). All investments fall as well as rise in value so you could get back less than you put in. This article isn’t advice – please ask for financial advice if you’re not sure what to do.

Find out more, including how to open a SIPP

If you already have an HL SIPP, you can simply log into your account to set up or increase a direct debit.

Top up my SIPP

*This calculation assumes growth of 5% after charges and retirement age of 68

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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