Studies have shown Irish women can expect to earn between a third and a half less than men at retirement
Low earners, young people and women risk being left out of the new auto-enrolment pension scheme, one of the UK’s top investment firms has warned.
Divorce, maternity leave, menopause and lower average pay put women in a more vulnerable financial position, according to research by Legal & General Investment Management (LGIM).
The gender pensions gap exists from day one, and it starts to accelerate from age 35, said Stuart Murphy, LGIM’s co-head of defined contributions.
He said the age and income thresholds to qualify for Ireland’s new auto-enrolment system are too high and don’t provide cover for women taking time off to have children.
Not only does the age mean that women don’t start saving as soon as they can, but they are more likely to earn less, he said.
Studies have shown Irish women can expect to earn between a third and a half less than men at retirement.
Research by LGIM found that a 30-year-old who stops pension contributions for just two years could see their final pension pot shrink by 10pc.
One in 10 women suffering menopausal symptoms leave their jobs, Murphy found.
So women that have had career breaks or perhaps haven’t saved as much throughout, when they potentially get into their prime earning years, they’re leaving the workforce, he said.
The Government’s auto-enrolment scheme would see an estimated 750,000 extra workers signed up to a pension plan, from 2024, if they have no private or workplace pension already.
It is open to those aged between 23 and 60, earning at least €20,000 (£17443.29), who can opt out if they wish. Employers and the State are expected to match or top up employee contributions.
If you’re an 18 or 19-year-old starting your first job, or a 21-year-old, and it’s there as part of the requirement that you contribute to your pension from day one, it’s part and parcel of your employment, said Tom O’Gorman, LGIM’s head of distributions for Ireland.
He said: Whereas, if suddenly, at 23 you have to find an extra 50 or 100 quid a month towards your pension, it just changes your attitude and your mentality towards it.