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Women are facing a "glaring" gender pension gap owing to career breaks to raise children and lower pay, an investment company has said.

Young women aged in their late 20s or early 30s faced an 11% smaller pension pot than men by the time they retired, Fidelity International said.

It said women faced a penalty because of motherhood and caring commitments.

But it also accepted that the industry was partly at fault for failing to engage women.

"We have to recognise where we have failed as an industry," Fidelity International's investment director, Maike Currie, told the BBC News website.

She said jargon and a lack of prominent women in the industry had contributed to lower investment by women than men, but accepted that a history of mis-selling in the industry had also had an impact.

For many women in their 20s, pensions have fallen on the priority list as they face up to more pressing financial concerns such as insecure work and the cost of renting a home.

It has often been said that the only people aged in their 20s who think about pensions are those who sell them.

"A lack of time, confidence, access to the right information, industry jargon and not knowing where to start are just some of the obstacles that stop many women from thinking that investment is for them," Ms Currie said in Fidelity International's Financial Power of Women report.

"Until these hindrances are removed, or at the very least addressed, we cannot unlock women's financial power."

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The first challenge, she suggested, was to explain to female workers that a workplace pension included a contribution from an employer that was part of their pay and was "free money".

At present, the pension auto-enrolment scheme means employers must enrol staff aged 22 and over and earning above £10,000 into a pension.

Ms Currie said that a "failure" in this system meant that that some women who worked part-time were not earning enough to qualify for these automatic pension contributions.

A DWP spokesperson said pension provision for women was improving: "Our pension reforms are setting millions of women on the path to a secure retirement and helping to address the historic gender divide in pensions income.

"The introduction of automatic enrolment has seen the number of women in the private sector without a workplace pension halved."

Pension gap

The report suggests that, using projections and allowing for the rising cost of living, a typical 25 to 34-year-old woman's pension pot would be worth £126,784 by the time she reaches a state pension age of 68. However, her male counterpart could expect a pension pot of £142,836.

The primary reason for this was a "motherhood penalty", caused by earning less and taking time away from work to bring up children, and a "good daughter penalty" that came from career breaks or part-time work owing to looking after sick or elderly parents.

As a result. the amount going into pension savings would fall or stop during these periods.

Fidelity International, which sells pensions and investment products, said that women tended to choose safer cash savings over more risky, but potentially more lucrative investment products.

During a decade of low interest rates, there has been little return from cash savings.

Ms Currie said this was, in part, owing to a lack of high-profile female fund managers in the industry who could attract women and create products that appealed to women's life and financial needs.

Pension Calculators

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