Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest.

WHEN was the last time you approached your boss and asked for a pay rise? If the answer’s never, then you need to read on. Because what I’m about to tell you will shock you - and hopefully spur you into action.

However old or young you are, how recently or how long ago you started working, this is important. Because the fact is that by not asking for a pay rise, you’re actively damaging your future wealth; never mind what you’ve got to spend today.

We all know about the gender pay gap already and the gender pension gap too. Women lose out in both. But combine these two problems together and compound them, by not being financially proactive throughout your working life, and you stand to lose out even more.

Women are being massively short-changed

Fidelity research shows that 50% of men will typically ask for a pay rise at some stage in their career, and 25% will ask more than once.1 When it comes to women though, just 37% of us have ever asked for a pay rise - and only 12% have gone back again to ask for more.

And, because men typically get, on average, £733 more than women each time they get a rise (£2,017 vs. £1,284) our financial modelling suggests this means that a woman’s pension savings could be as much as £142,603 less, on average, than a man’s by the time they reach retirement.2

But I’m afraid the news gets even worse. Throw in a career break or two and you can see where this is going. A woman taking a five-year career break during her 30s will reach retirement with a pot worth £217,610 - which is almost £60,000 less than a woman who stays in full-time employment throughout her working life.

Now, add in the fact that women typically have longer life expectancy, meaning their pension pots need to last longer and it’s plain to see how lower pay, smaller pay rises and career breaks all combine to create a significant shortfall.

If you don’t ask, you don’t get

The simple take-home lesson here though is one we’re all familiar with - if you don’t ask, you don’t get. And by being scared or reluctant or just plain unsure of how to ask, we are more likely to end up short-changed in retirement.  

On the plus-side, the ball is very much in your court. You can help yourself here.

Firstly, ask for a pay rise. It’s in your financial interest both today and in retirement to do so. And secondly, start paying into your pension pot as soon as you start working and keep going - even during career breaks - so you can start to bridge that whopping great gender pension pay and pension gap.

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1  Research conducted between 18 and 25 October 2021 by Opinium Research on behalf of Fidelity International amongst a sample of 3,000 nationally representative UK adults.

2  Analysis conducted by Fidelity International December 2021. Assuming a starting age of 25 retiring at 65, with starting salaries based on ONS UK average salary across all workers, with pay rises received every five years. Average real terms salary growth of 1% per annum, average real terms pay rise growth of 1% per annum and assumed investment growth of pension pot at 4.25%. Pension savings modelled on 8% contributions.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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