Women in Ireland will need to work 8 years longer to retire with the same pension pot as men.

 

It’s a bit shocking, isn’t it? I know I certainly don’t want to work 8 years longer than my husband! We want to enjoy our retirement together, we both work hard and have our shared goals for what our today, tomorrow and future looks like. So why might I have to work 8 years longer in order to have an equal pension pot? The quick answer is; the gender pension gap.

 

What is the Gender Pension Gap and why does it exist?

 

Simply put, the gender pension gap is the percentage difference in pension income between women and men. The 8 years longer quote is based on the Irish Life 2024 Gender Pension Gap Report showing that there is a 36% Gender Pension Gap. And there are multiple reasons, many systemic and based on societal expectations and roles, that contribute to this gap.

 

Salary disparity:

 

There is a 22% salary disparity between men and women (this disparity first appears in our 30s and grows over time), women are twice as likely to earn under €30,000 whereas men are twice as likely to earn over €100,000.

 

Time out of workplace:

 

Women in Ireland on average take 6 years out of the workforce, are 48 times more likely to be carers and are 3 times more likely to work part time to balance work and family commitments which limits their earning potential and consequently their pension contributions. Research conducted by Retirement Planning Council of Ireland reveals that 71% of women took career breaks, with up to 94% leaving their jobs because they became mothers.

 

Financial literacy (or lack thereof):

 

Women struggle with confidence around pension and finances, a study by Aviva revealed that 44% of women feel they don’t understand pensions and investments compared to 27% of men, leading to less proactive retirement planning.

 

Implications

 

The financial ramifications for women are profound. With smaller pension pots, women face reduced financial security in retirement, increasing the risk of poverty and limiting their ability to maintain their pre-retirement standard of living.

 

Addressing the Gap

 

    • To bridge this gap, several measures can be implemented:

 

      • Policy Reforms:

 

          • Implementing auto-enrollment pension schemes can ensure broader participation in pension savings, especially benefiting those in lower-paid or part-time positions.

         

            • Employer Supports:

         

              • By having a paid maternity leave policy, it allows women to continue their pension contributions throughout their maternity leave. By having flexible work options, such as flexitime, job sharing, working from home, back to work initiatives, menopause policies, it can allow women to stay in the workplace. And helps the employer as they don’t lose valuable workers and their experience and knowledge.

         

                        • Financial Education:

                          •  

                            • Enhancing financial literacy among women can empower them to make informed decisions about retirement planning. The same Irish Life study showed that those making single and/or regular AVCs (Additional Voluntary Contributions) are likely to get 150% larger pension pots, but men are 60% more likely to make single premium AVCs and are 12% more likely to make regular AVCs.

                         

                                      •  
                                          • Support for Caregivers:

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                                            • Recognising and compensating caregiving periods in pension calculations can mitigate the impact of career breaks on retirement savings.

                                            •  

                                            • Addressing the Gender Pay Gap:

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                                                Ensuring pay equity can lead to more equitable pension contributions over time. The gender pension gap is a multifaceted issue that requires a multifaceted solution, and there is no one size fits all for all women. Recognising the value of very often hidden and mostly unpaid work and how it contributes to society and truly valuing this work in monetary terms would be a great start. We all need to acknowledge and address the systemic issues which requires concerted efforts from policymakers, employers, and individuals to help create a more equitable and secure financial future for all.

                                 
                                But for today, I would love for any woman reading this, to take a moment and think about your financial future. Do you have a pension? What are you contributing? Can you afford to contribute AVCs?

                                 

                                I attended an event last week where a nutritionist spoke about how we need to look after our wellness today and not our illness in the future. I think this can be applied here too. You need to look after your financial wellness today, so that your future you can enjoy the benefits.

                                 

                                Metis Ireland provide financial plans for all genders! Reach out today to speak to one of our team to review your financial future 01 9081500 info@metisireland.ie

                                 

                                Sinéad Clinton Caldas
                                Director – Head of Compliance

                                 

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