Women’s private pension pots are typically 35% lower than men’s by the age of 55, according to the first major government review into the gender pensions gap.
The government’s review looked at the amount that both women and men saved between 2018 and 2020 into their private pensions, and found that for every £65 women saved, on average, men managed to put away £100. This makes a substantial difference to the amount they are able to build up by the time they reach retirement age.
Here, we take an in-depth look at the government’s findings, and explain where you can get further help to potentially boost the amount you save towards retirement.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
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What is the gender pensions gap?
The gender pensions gap is the difference between the amount held in pensions by men and women. However, there are a number of different ways that the gender pensions gap can be measured. The government’s review determines that it should be defined as follows:
“The percentage difference between female and male uncrystallised median private pension wealth around normal minimum pension age for those individuals with private pension wealth. Uncrystallised private pension wealth includes that which is active or preserved, therefore not in payment.”
This jargon essentially means that the government has measured the difference in private pension savings between men and women between the ages of 55 and 59 that haven’t been accessed yet. This age group was chosen as they are the most likely to be considering taking money out of their pension pots within the next few years. The government’s analysis does not factor in the State Pension gap, but you can find information on this below.
How wide is the gender pensions gap?
The gap in private pension wealth between men and women is currently 35% (2018-20), according to the government’s new research. This means that the average 55-59-year-old man has pension savings worth £145,000, whereas the average woman in the same age range has £51,000 less in retirement savings, with an average pension worth £94,000.
The current gender pensions gap is smaller than the previous period (2016-18) when it stood at 40%, with an average difference of £53,000 between men’s and women’s pension wealth. However, the gap has fluctuated over the years, and this fall doesn’t necessarily indicate that the gap will continue to narrow going forward.
Separate analysis of a smaller number of savers from Now Pensions and the Pensions Policy Institute (PPI) found that women face a £136,000 shortfall at retirement age, and will need to work an additional 19 years to close the gender pension gap. It showed that by the time women reach 67, the State Pension age, they will have average pension savings of £69,000, which is £136,000 less than the average man, who will have saved £205,000 over the same time period.
The gender pensions gap by age group
The gender pensions gap changes considerably depending on the age range being reviewed, as the following table shows:
Age range | Male average pension pot | Female average pension pot | £ difference | % difference |
16 to 24 | £4,000 | £2,000 | £2,000 | -50% |
25 to 29 | £8,000 | £5,000 | £3,000 | -38% |
30 to 34 | £14,000 | £10,000 | £4,000 | -29% |
35 to 39 | £25,000 | £23,000 | £2,000 | -8% |
40 to 44 | £52,000 | £31,000 | £21,000 | -40% |
45 to 49 | £88,000 | £46,000 | £42,000 | -48% |
50 to 54 | £100,000 | £78,000 | £22,000 | -22% |
55 to 59 | £145,000 | £94,000 | £51,000 | -35% |
60 to 64 | £121,000 | £68,000 | £53,000 | -44% |
65 to 69 | £108,000 | £50,000 | £58,000 | -54% |
70 to 74 | £90,000 | £34,000 | £56,000 | -62% |
75+ | £100,000 | £30,000 | £70,000 | -70% |
Source: GOV.uk – The Gender Pensions Gap in Private Pensions (published June 2023)
Reasons for the gender pension gap
There are a number of factors that are generally accepted as contributing to the gender pensions gap. These include:
Gender pay gap
Women are typically paid less than men, and while a lot is being done to close the gender pay gap this means they aren’t always able to contribute as much to their pensions as men.
In April 2021, the difference between the amount that men and women are paid on average stood at 7.7%, according to government figures. The average amount a man contributed to their pension was £5,240 in 2021, which is 7% higher than the average woman’s contribution, at £4,870.
Different working patterns
Women are more likely to take breaks from work than men, often to undertake unpaid work such as childcare, or caring for family members. This often means that women don’t pay into private pensions for a period of time and they may miss out on National Insurance payments which contribute towards their State Pension entitlement.
This is underlined by the widening gender pensions gap for older age ranges. The gap is relatively small until the age of 40, but after that the gap almost triples. The government’s analysis says that the widening of this gap is due to the different working patterns of men and women, such as women taking time out of work to raise a family.
Historically lower pension participation rates for women
Women have historically been less likely to pay into pension schemes than men, although since the introduction of auto-enrolment in 2012, this has changed. However, there are millions of women who won’t have benefited from auto-enrolment, or for whom it was introduced too late to make a big difference. Read more in our article How does pension auto-enrolment work?
The number of women who are eligible for auto-enrolment and are working either part or full-time now is actually higher than men, with 89% of women contributing to their pension versus 87% of men. This could mean that going forward there is a more positive outlook for women’s pension savings, although more will need to be done to protect women’s different working patterns.
It’s also important to note that more women work in lower paid roles than men, and these jobs don’t always qualify for auto-enrolment, so they would need to request enrolment.
Lower contribution rates for women
While participation rates might be balancing out, on average women pay £57 less into their pensions each month than men, which after employer contributions becomes a difference of £114 a month, according to research by financial company interactive investor. This difference in contributions is considerable, but over time the impact of the difference in contributions will compound, making the difference even larger.
In addition, while the proportion of women paying into the pension at lower values (£100 – £250 a month) is relatively equal to men, once pension contributions rise to £250 a month, one in five men contribute this amount, whereas only one in eight women do this.
You can read more about the gender pension gap and the reasons for it in our article Women and the gender pensions gap.
State Pension gender pensions gap
The gender pension gap also exists in the amount men and women receive in State Pension, which is largely due to women taking time out of work for a number of reasons and therefore not having a full National Insurance record. Read more about how you build up your entitlement to the State Pension in our article How the State Pension works.
Currently, the difference in the amount of State Pension received by men and women is 2.81%, or around £5 a week, which is considerably smaller than the private gender pensions gap. However, for the basic state pension, the difference is 14.42%, or £25 a week difference.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “It shows how women retiring under the new system are getting a better deal than they did under the previous one. We are also seeing the number of people receiving less than £100 per week in state pension continuing to come down for both men and women.”
One thing you can do to understand what you might get from your State Pension when you retire is to check your forecast. You can request a State pension forecast here and if you’re on track to receive less than you expected, you may be able to fill any gaps in your record. You can read more about this in our guides How can I get a State Pension forecast? and Is it worth paying to top up your State Pension?
Why is this gender pensions gap research important?
The government’s publication of the gender pension gap research is a valuable first step in formally recognising and tackling the disparity between men and women’s pension savings.
This is the first time the government has underlined the size of the gender pensions gap, although several reports have been published in recent years on the issue. It’s hoped that the government’s report and understanding of the gap and the reasons behind will help work towards closing the gender pensions gap.
Finally…
Read more about the gender pensions gap in our article Women and the gender pensions gap. If you’re not sure whether you’re saving enough for retirement, our article How much should I save for retirement? may help.
If you’re concerned about your pension savings or don’t fully understand where your money is being invested, you might want to speak to an independent financial adviser who can recommend the best course of action based on your individual circumstances.
You can find a local financial advisor on VouchedFor* or Unbiased*, or for more information, check out our guides on How to find the right financial advisor for you or How to get advice on your pension.
If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.
Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,000 reviews on VouchedFor, the review site for financial advisors.
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