Women face 43% pension gap compared to men at 55

11 November 2024

A recent analysis of nearly two million people reveals a significant pension gap between men and women, largely due to parenting and caregiving responsibilities. 

Despite showing strong interest in pensions - often ranking pension benefits as a top priority when applying for jobs - women consistently save less for retirement throughout their careers. This savings gap starts at 16% in their 30s and widens to 43% by age 55.

According to FT Adviser, the Royal London report attributes this gap to several factors. The primary contributors are career breaks for caregiving, part-time work and the gender pay gap.

Many women take on lower-paid, part-time roles to balance work with family responsibilities, with around a million women under 50 currently out of the workforce due to caregiving commitments. Typically, these include looking after their children or grandchildren and providing care for their elderly parents or other relatives.

As a result, women often miss out on both employer contributions and the long-term investment returns from saving into a pension scheme.

Clare Moffat, pensions expert at Royal London, said: "Millions more women may now be saving thanks to auto enrolment, but we can’t escape the fact that parenthood and caring responsibilities interrupt women’s working lives. It’s an issue that affects their take home pay, career opportunities and ultimately their pensions savings.” 

Moffatt also pointed out that by the time they reach retirement, women typically only have around £60 saved for every £100 that men have.

Despite the challenges, steps can help address these inequalities and close the gap. These may include maximising contributions during high-earning years and making catch-up contributions in later life. 

Women should also check if they can top up their National Insurance contributions to be eligible for the full State Pension, which is currently worth £221.20 per week for the 2024–25 tax year.

Source:

Pension savings gap starts at 16% in their 30s and widens to 43% by age 55: Women have 43% less in pension pot than men at age 55. FT Adviser. Accessed 31 October 2024.