March 8th marks International Women’s Day. This year’s theme is Accelerate Action, with a focus on speeding up gender equality. So, now is a great time to talk about the significant disparity faced by women in retirement planning and pensions. This difference is known as the Gender Pension Gap.
How vast is the Gender Pension Gap currently?
The gap in pension pots between men and women is larger than the better-known gender pay gap. The pay gap impacts women through their working life, and feeds into the pension gap disparity. The first government data about the Gender Pension gap in private pensions was published in 2023. It showed a gap of approximately 35% on average in pension funds between men and women. Office of National Statistics data shows that in the 50-64 age bracket, women are likely to retire with private pension funds that are 33% smaller than men.
What causes the Gender Pension Gap?
As previously mentioned, the gap in average salaries between men and women is a major factor in the Gender Pension Gap. As women are paid less, they have less disposable income and therefore less funds available to invest in pension pots than men.
The career breaks that often feature in women’s working life are also a factor. Whilst on maternity leave, many women in employment only receive Statutory Maternity Pay. With reduced income and increased expenses from having a baby, this widens the Gender Pension Gap further. Women may pause payments into privately-held pensions until they return to work, and work-based pension contributions also decrease.
For those eligible for auto-enrolment workplace pensions, disparity in pay between genders results in a lower value of contributions for women. Contributions are based on a percentage of the employee’s salary. Therefore, a lower salary will lead to lower contributions. During maternity leave, contributions are still made to workplace pensions however this will be at a lower rate; employer contributions are still based on the employee’s pre-leave earnings, but employee contributions are based on their maternity pay.
Not all workers are eligible for auto-enrolment into workplace pensions. Employees must be over 22, under State Pension age and earning over £10,000 per year. From October to December 2024, approximately 70% of all part-time workers in the UK were women (UK Parliament). Those working part-time are less likely than full-time employees to meet the eligibility threshold for auto-enrolment. If employees are not eligible for auto-enrolment into workplace pensions, they may not have any pension to contribute to at all.
The Women and Retirement Report by Scottish Widows at the end of 2024 suggested that unless decisive action is taken, the Gender Pension Gap in the UK will take at least 20 years to close (Financial Reporter).
As of 2025 data, women live longer than men on average with an average life expectancy of 83 compared to men’s average life expectancy of 79. This means women’s pension pots may well need to last for longer than their male counterparts’. The need is therefore greater than ever to bridge the Gender Pension Gap.
What steps can be taken to enhance women’s financial security in retirement?
There are a few steps that can be taken by women to enhance their financial security in retirement. Early saving into a private pension will make a vast difference. The longer you invest in your pension, the greater the potential for growth within the investment. As soon as you are eligible, employees should take advantage of employer contributions into workplace pensions. This is especially the case if your employer offers generous employer contributions benefits. It is a great way to boost your pension pot without financial implications to yourself.
Successive governments have had concerns about the Gender Pension Gap. They continue to look at what can be done from a policy perspective. This may include tackling pay equality during the working years. It should not solely be left to government legislation to bridge the gap, though, and women should independently boost their pension savings. This will speed up the narrowing of the Gender Pension Gap, and will also give them greater financial security in retirement, on an individual level. It is widely understood that a State Pension alone will not be sufficient to have a financially secure retirement, so you should contribute to a private pension too.
For assistance, enlist the help of financial experts such as Willday Wealth Management. Our team will not only advise you on the right investments to meet your retirement goals, but will tailor-make a financial plan for you too. Our team makes sure that your funds are invested for the most efficient and effective growth. We will also keep an eye on your portfolio of investments to make sure your money is working as hard as possible for you. Contact us to book an initial consultation.
