How to plug the pension gender gap

Women are able to build pensions worth less than half those of men by retirement age, research shows.

Women’s pensions are worth around £100,000 on average by the time they reach retirement age – just 42% of the value of the average pension for men, worth £235,000, according to research based on data from the Office for National Statistics.

The research from financial adviser Fintuity also finds that in order to close that gap, a woman aged 20 needs to contribute an additional £1,300 a year to her pension – that’s more than £100 extra a month.

That figure rises with age, so for someone aged 30 the extra pension contribution needed is £2,000 a year (£167 a month), for a 40 year old it is £2,900 year (£242 a month) and for a woman of 50 it’s a hefty £5,300 a year, or more than £440 extra per month.

Given that in 2019 the average woman aged 30-39 earned £28,990, or £2,416 a month, according to the ONS, finding an extra £167 for pension savings each month is likely to be a big ask for most women. That’s particularly the case during this decade, when they are most likely to be taking time out on maternity leave and working part-time so that they can look after young children.  

There are a number of factors contributing to the pensions gap, including the amount of time taken out of work or working part-time for childcare and looking after elderly relatives, the fact that maternity leave can affect pension contributions made through salary, and a tendency to take more locally based lower-paid work to fit in with family commitments.

- Retirement wealth has almost doubled, but gender pensions gap remains bleak

Additionally, auto-enrolment rules require employees to be earning at least £10,000 from a single employer, working against those who take two jobs to make ends meet.