Women’s private pension funds in the UK are typically worth 35% less than those of their male colleagues by the time they reach 55, according to the first major government study into the so-called “great pension gender gap”.
After analyzing data for both sexes between 2018 and 2020, government researchers concluded that, on average, for every £100 accumulated in men’s private pensions, women receive only £65. Women could end up losing thousands of pounds in retirement income as a result of the imbalance.
Lower gross incomes, time off for childcare and other care duties, and greater numbers of women working part-time are thought to have caused women’s pensions to grow to only two-thirds the size of men’s.
Although many reports have been published in recent years on the topic of the gender pension gap, this is the first time that the government has calculated the true scale of the problem.
The researchers found that the gap varied across age groups and was lowest for people in their 30s, suggesting that time off for childcare was a big factor.
For workers eligible for automatic registration, the gap is even smaller, at 32%. Overall, the gap rises to 47% for those between the ages of 45 and 49.
The study also revealed a gap in the contributions made by men and women. In 2021, around £52 billion was paid out in private pensions for women eligible for automatic enrollment, compared to £62.6 billion in pensions for men – a gap of 17%.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, called the 35% “less gap, more significant gap”. “The government recently announced childcare reforms that should help more women continue to work and contribute to their pensions, but it looks like the gender pension gap will be with us for some time yet,” she said.
Laura Souter, head of personal finance for investment platform AJ Bell, said the numbers showed that once women reached their 40s, they lagged behind men in their pension savings.
“Much of this will be due to women taking career breaks to bear children, working part-time around caring responsibilities, or a gender pay gap meaning they earn less – all of which are filtered to lower incomes and lower pension contributions.”
The figures do not include people who do not have a pension when they reach retirement age, which Sutter says would make the gap even larger because women are more likely than men to have a pension.
Pensions Minister, Laura Trott, said: “The success of automatic enrollment has transformed the UK pension landscape and brought millions of women into pension saving for the first time. However, while the participation gap has closed, the wealth gap remains.
“Publishing an official annual metric will help us track the collective efforts of government, industry and employers to close the gender pension gap.”