Women could close the gender pension gap by contributing an additional one per cent of their salary towards their pension early on in their careers, Fidelity International has calculated.

In its The Financial Power of Women report, Fidelity says that this modest increase in savings would equate to an average of £35 per month in contributions over 39 years, and would breach the 11 per cent gap that currently exists between the average future pension for men and women.

Using ONS projections and adjusting for inflation, the financial services company has worked out that the average pension pot for a man currently aged between 25-34 will be worth £142,836 at the State Pension age of 68. This falls to a pot of £126,784 for women.

It explains that this is primarily a result of women still earning less and taking time away from their careers to raise children or to care for a sick or elderly relative.

The report used research among 2,000 people across the UK (1,000 women and 1,000 men) and found that the barriers that stop women from investing include salary limitations, household costs and chores. A quarter said a reduction in household costs would help them to invest more each month and just under a third of women said that a salary increase would encourage them to invest.

A lack of trust and understanding when it comes to investment is another issue raised in the report, with over one in 10 women, twice as many as men, saying that they do not comfortable choosing financial products and services.

In addition, the majority of women tend to be apathetic when it comes to engaging with their pensions and where they are invested. More than half of women who hold a pension do not know where it is invested, while close to a third don’t know how much our pensions are worth.

Fidelity International investment director, Maike Currie, said that to unlock the “financial power” of women, the pensions and investment sectors needed to address the personal, professional and policy barriers that are stopping women from investing.

“On a personal level, women still shy away from risk and prefer the perceived safe haven status of cash,” Currie said.

“On a professional level, the investment industry needs to do more to build trust and an understanding of their products and services among women. Finally, at a policy level, we need to look at the way pensions are designed and question whether they take account of the unique life choices and challenges women face.”

Also commenting on the report, Laura Suter, a personal finance analyst at AJ Bell, said that the women’s saving shortfall was concerning for two reasons. Firstly, because women typically live longer than men, and secondly because 76 per cent of women over the age of 60 are either single, widowed or divorced when they die, according to the Pensions Policy Institute, meaning that the assumption that women can rely on their husband’s pension income was an outdated one.

“It will be dispiriting for many woman to know that the gender pay gap that exists during their working life, which means they earn on average 18 percent less than men, will also clobber them in retirement,” Suter said.

“Government figures show that men in the 55-64 age bracket have more than double the pension pot of women of the same age, drastically changing their income levels in retirement.

“The onus is on the financial industry to make investing more approachable for everyone, particularly women, and to cut through the waffle and baffling jargon to make it easier for everyone to invest their money.”

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