- Wimbledon starts next Monday (29 June) and is offering equal prize money for the women’s and men’s events for the 20th consecutive year
- This year the women’s and men’s singles champions will take home £3.6 million each, while the runner up gets £1.8 million
- But there remains a stark gender pay gap elsewhere in sport and outside of it
- Women working full time are on average paid 6.9% less than their male counterparts – and that translates to a 48% pension gap
- AJ Bell Money Matters research shows that the gender pension gap begins at age 28
Sarah Coles, head of personal finance at AJ Bell, comments:
“The players are warming up for Wimbledon, with the chance of winning £3.6 million and an impractically large piece of silverware. And for the 20th consecutive year, the prize money for both men and women will be the same. Wimbledon argued for years that unequal prize money was fair because with fewer games, women could also compete in the doubles and win more money overall, before it finally changed its mind in 2007.
“However, notoriously, the rewards for athletes are anything but equal. The sport you excel in, the level you play at, and the sponsorships you manage to secure understandably make a world of difference. But the level of pay on offer for men and women in the same sports is worlds apart too – the highest-paid female footballer in the world is reportedly the US player Trinity Rodman, who is said to make £28,500 a week. But the highest paid male player is thought to be Cristiano Ronaldo, who is rumoured to make upwards of £3 million a week.
The impact of the pay gap on pensions
“While anyone making tens of thousands of pounds a week, even for a short sporting career, should be in a decent financial position, it’s a striking example of the pay gap. Government data tells us that women working full time are paid, on average, 6.9% less than men.
“The overall figures hide dramatic differences depending on your age. When people start out in their working life, aged 16 to 17, women earn slightly more than men. By the time they reach the 22 to 29 age bracket, men have started to edge ahead, with a pay gap of 0.9%. But this accelerates through the rest of their working lives, to hit 12.5% in their 50s.
“That’s a sizeable difference in take home pay, but it also means that women are paying less into their pension each month, which has a snowball effect on their pot over time. Government data shows that in retirement the income gap is widest of all, with those aged 60 and over facing a gap of 12.6%.
“This is a natural consequence of women earning less throughout their lives. Even if they put the same percentage of their salary away, they automatically have smaller average pensions than men. Many of them can’t stretch to the same percentage payments either. As a result, HMRC estimates that women have 48% less than men in their pension pots.
“AJ Bell Money Matters research shows that the gap opens up at the age of 28. At this point saving for retirement moves up men’s financial to-do list, with over a fifth (22%) saying it’s a priority. However, only 8% of women say it’s a priority at this age. This owes an enormous amount to the fact that men are on higher average salaries, so their income stretches further to cover more priorities.
“As many women take career breaks to have children or to care for family, the gap grows, appearing from missed or lower contributions in the key years when pension growth is so important.
“The AJ Bell Money Matters research shows that pension priorities catch up by the age of 41, by which time there’s significant ground to make up. But the good news is that it’s never too late to make a difference. At age 41, by paying £100 extra a month into your pension, you could build an extra pot worth £42,500 after 20 years. That increases to over £66,700 if the payments continued until age 67 (the current state pension age). This £100 a month would cost a basic rate taxpayer just £80 a month, with £20 added on top by the government in pension tax relief, and costs even less for those who pay tax at a higher rate*.
“If Arthur Gore could win Wimbledon at the age of 41 in 1909, then you have time to boost your pension and build your resilience in retirement.”
*Assumes your pension pot grows by 6% each year and includes annual charges of 0.6% and all dealing charges.
