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In Ireland, there is a significant gap between a man and a woman’s pension income in retirement. The gender pay gap, which currently stands at 13.5% in Ireland (according to an article by McCann Fitzgerald in 2018), is a leading contributor to the gender pension gap.

As a population, we are living for longer and as a result, becoming more conscious of funding our retirement. Unfortunately, the State Pension cannot be guaranteed into the future and this means that we may rely more heavily on private pensions in years to come. Women live on average five years longer than men, however, they are likely to draw down much smaller pension policies. Research from Irish Life found that men drew down an average of €125,000 from their private pensions between August 2018 and August 2019 compared to €69,000 for women. An Economic and Social Research Institute (ESRI) report found that on average men receive €433 a week in retirement compared to women who receive €280. This translates to women earning €8,000 less each year in retirement.

Why is this? Well, it’s not a simple answer but the following are some of the major contributing factors:

• Men have been in the workforce for longer than women resulting in more men having private pension plans or being members of occupational pension schemes.
• Women are more likely to take a career break to raise a family than men.
• In a relationship/marriage, a woman is more likely than a man to move to part time work. According to McCann Fitzgerald, women are nearly three times as likely as men to work less than 18 hours per week.
• Women tend to work in lower-paid jobs and as a result, they are under-represented as a group in senior management roles and over-represented in lower paid and part-time work.

In summary, women tend to earn less, work fewer hours and have shorter careers than men. Unfortunately, earning less means fewer contributions to private pension schemes, adding to the current gender pension gap.

Another contributing factor is that women were found to be more risk-averse when it comes to money and have poorer financial literacy skills compared to men. Figures from Irish Life showed that in 2018 just over one in three women have a private pension compared to 55% of men. On top of this, another study carried out in 2018 showed that a significant 71% of women said that they do not know how to start a pension.

In order to address some of the contributing factors to the gender pension gap, the ESRI has called for policies to raise female employment levels, improve female pension coverage, and encourage more continuity in employment through better child and elder care supports.

If you are a woman who is currently employed and you are not paying into a Pension Plan or you are concerned about your income in retirement, I recommend that you contact your local Financial Advisor who will be happy to help you set one up.

Marie Carr MSc BBS QFA RPA is a Qualified Financial Advisor. You can contact her through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on marie@jfl.ie