UK gender pension gap at 35%

The latest report from The Department for Work and Pensions (DWP) revealed a significant gap in pension size between men and women.

The Gender Pensions Gap in Private Pensions, published in June, detailed a 35% gap in the median private pension wealth between men and women around the normal minimum pension age, with the gap reducing to 32% for workers who were eligible for auto-enrolment into their workplace pensions scheme. 

The findings are based on the Annual Survey of Hours and Earnings (ASHE) which was published in 2022. 

The pensions gender gap statistics

In their report, the DWP found that the size of the gender pensions gap varied depending on age, with the gap at the smallest (10%) for workers aged between 35 and 39 years old, which then increased to 47% for those aged between 45 and 49 years old, before decreasing in the later working years. The DWP noted this pattern follows a similar path to the gender pay gap which indicated a small gap until the age of 40, after which it tripled as a result of the "different labour market trajectories" between men and women. 

The trade union Prospect, on the other hand, estimated that the percentage difference in retirement income for women and men between 2020-21 was a staggering 40.5%.  

In this day and age, why does a gender-based pensions gap exist?

There are a number of factors that contribute to the startling gap between genders in pensions wealth.

Outside of the gender pay gap, which naturally contributes to the difference because it means women are still taking home less pay on average than men and therefore contribute less into their pensions, women historically perform the bulk of unpaid labour in society.

For example, women are more likely to put their careers on hold while raising a family. As a result, women are more likely to work part-time, especially during the initial period of bring up a family. Data from the ONS showed that 38% of women were working part-time compared to just 14% of men in 2022. And while this is changing, as society wakes up to the need for a fairer society, with paternity leave becoming more common, it still remains that women statistically are the ones that sacrifice their hours and in tern their take home pay, and therefore their pensions contributions, in order to help raise a family.

Of course, there are many other factors at play that contribute to the pensions gap. Career paths, gender pay discrimination, how pensions are split following divorce are but a few contributing factors.

But the bottom line is, if you’re a woman, you’re statistically more at risk of having significantly less pension wealth than your male counterpart.

The key to avoiding these shortfalls is to plan in advance. Considering how all of these factors can affect your pension wealth down the road, planning accordingly can go a long way to mitigating some of these inherent disadvantages. Specifically, a female-focused retirement planning approach is the most effective way to secure a comfortable retirement.

If you’d like to find out more about how to navigate these potential shortfalls, or are simply interested in finding out more about how you can best plan for your future retirement, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our chartered advisers to find out how we can help.

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Note: this article is intended for general information and should not be taken as individual financial advice. The value of investments can go down as well as up, returns are not guaranteed and you may not get back what you originally invested.