Aviva has enhanced its pension portal with the aim of helping further reduce the pensions gender gap.
Its new ‘career break’ tool lets members model the potential impact of a career break on their final pension pot. It can also be used to show the effect of reduced contributions should members change their working hours.
The pension provider says this has been designed to help members more fully understand the impact of stopping or changing contributions levels on their overall retirement savings. While this can be used by all members Aviva says this new feature will particularly benefit women, more of whom take career breaks after having children and are more likely to work part-time due to caring responsibilities.
It adds that new pension contribution data shows that the gender pension gap has widened for women in their 30s and early 40s. It adds that it hopes this tool will encourage people to maintain pension contributions, where possible, during these periods.
Aviva’s workplace pension data for 5.5 pension policies show that on average men contribute over 27 percent more than women into their pension savings every month. This pension gap has reduced over the past four yeas, but only marginally, by around 1 percentage point.
However the data shows this is not consistent across different age bands. While the gender gap in contribution rates for women over 45-years-old has reduced over the past year, it has moved in the opposite director for women aged between 30 and 45-years-old, increasing by an average 3 percentage points
This coincides with the period of time women are likely to take maternity leave, or work part-time when children are younger. Recent data shows that the average age of mother’s having children is now just over 30 years old.
At every age group men typically contribute more into pensions than women so the gender gap widens throughout their working lives. In the youngest age group (aged 20 to 24) the gender pension gap stands at 15 percent, but this is at 41 percent just prior to retirement. This trend is often exacerbated by pay gaps, with pension contributions typically linked to earnings.
Aviva’s Working Lives Report (2024) found over almost two in five (38 percent) of women said their pension will not provide enough for a comfortable retirement, compared to a quarter of men (25 percent).
Aviva head of pension engagement Laura Stewart-Smith said: “Our new career break feature is designed to help our workplace pension members get ready for retirement planning by modelling changes to their pension contributions
“This is an example of how we continue to innovate for our clients to ensure their employees have the tools which allow them to engage with their pensions today and plan for their future retirements.”
She added: “There are positive signs the gender pension gap is closing, albeit slowly. This progress might be because people are now more aware of the impact that career breaks or working fewer hours can have on workplace pension savings. However, the gender pension gap continues to persist for women in their thirties and early forties, and this could reflect a time of life when people often make significant choices about career and childcare.
“Pension contributions are unlikely to be a deciding factor when considering whether to take a career break or reduce working hours, but anyone making these decisions should take the time to understand the long-term impact on their retirement savings. Good pension planning is key for people getting ready for a more comfortable retirement, which is why we have launched our career break feature.”
