Women Face Significant Pension Savings Gap, Report Reveals

Women in their mid-50s possess only 54% of the private pension wealth compared to men of the same age, according to a report by the Pension Policy Institute (PPI). This disparity, known as the gender pension gap, is significantly influenced by labor inequalities, which account for 39% of the gap, and the gender pay gap, responsible for 19%.

The PPI report highlights that women are more likely to engage in part-time work or take career breaks for caregiving responsibilities, contributing to labor inequalities. The gender pay gap also plays a crucial role; while it has seen improvements, full-time male employees still earn 6.9% more than women, a figure that rises to 12.8% for all employed individuals in 2025, according to the Office for National Statistics.

Despite these challenges, women are more likely to work in the public sector, including roles in healthcare, social services, and teaching. These sectors often offer more generous pensions, providing a 12% positive impact on women's pension wealth relative to men. However, this does not fully offset the broader savings deficit.

The report also indicated a wider societal issue, with 57% of pensioners living in poverty being women. John Adams, senior policy analyst at the PPI and author of the report, described the gender pension gap as a severe inequality that places women at significant risk of pensioner poverty. He emphasized the PPI's commitment to providing independent evidence to aid policymakers in addressing this issue.

Further analysis from AJ Bell suggests the gender pension gap begins to emerge as early as age 28, coinciding with when women often reduce work hours or take time off for childcare. The firm also notes that women are less likely than men to prioritize retirement savings until later in life.

Sarah Coles of AJ Bell detailed how the pay gap widens with age. While women under 20 may earn slightly more than men, by the 22-29 age bracket, men begin to earn more, with a 0.9% pay gap. This gap accelerates to 12.5% in their 50s. This difference in take-home pay directly impacts monthly pension contributions, creating a snowball effect on retirement pots over time. Government data shows that in retirement, the income gap is most pronounced for those aged 60 and over, with a gap of 12.6%.

Coles also pointed out that reliance on a partner's pension can create vulnerabilities for women in the event of divorce, separation, or bereavement. Single women, particularly those who are divorced or never married, can face greater financial difficulties in retirement.

AJ Bell offers five strategies for women to mitigate the impact of flexible work and lower pay on their pensions:

1. Workplace Pension Enrollment: Women earning less than £10,000 annually or working part-time may not be automatically enrolled in workplace pensions. Those earning between £6,240 and £10,000 can opt in to receive employer contributions. Individuals earning below £6,240 can request to join a scheme, though employer contributions may not be guaranteed.
2. Maternity Leave Contributions: While financial strain during maternity leave can be challenging, maintaining pension contributions is advised. Contributions are calculated based on maternity pay, and employers are required to continue their contributions.
3. Couple Contributions: When one partner reduces hours or stops working, discussing pension contributions as a couple is recommended. Non-earning partners can contribute up to £2,880 annually, which is topped up by the government to £3,600.
4. Increase Contributions: If immediate higher contributions are not feasible, pledging to increase contributions with pay raises or longer working hours can be effective. Setting contributions as a fixed percentage of salary ensures automatic increases with income growth.
5. Utilize One-Off Payments: Using bonuses or other one-off payments to boost pension savings can significantly impact long-term wealth. Research indicates men are more likely than women to use such payments for their pensions.