Partner Content by Royal London

Bridging the gender pension gap

You may be reading this thinking the gender pension gap is something that’s likely to disappear in line with improvements to the gender pay gap. So it would be understandable to presume that it may only affect women reaching retirement now, where pensions outcomes largely reflect inequalities in the workplace from the past.  However, this is an issue that’s still very real and isn’t showing any signs of disappearing soon. Our recent research investigated this, and I want to have a brief look at where we are with pension saving but also why there’s still a pensions gender gap and some thoughts on areas where employers might be able to help.

Auto enrolment

Auto enrolment has made a huge difference to the amount of people saving into a pension. In 2021 91% of eligible female employees and 89% of male employees paid into a workplace pension (more than double when compared with 2011).1  Among part-time eligible employees the gap is bigger: 86% of eligible female part-time employees are participating compared to only 74% of their male counterparts.2 But that’s only part of the story. Of employed women in the UK, around 38% are working in part time roles, and with average earnings for part time workers around £7,000 they’re less likely to meet the AE threshold of £10,000.3

The confidence gap

Our research found that earnings are a key barrier to greater savings. When asked what’s preventing them from saving / saving more for retirement, 50% of women surveyed said they don’t earn enough money, compared with just 30% of men. We also know men are much more likely to contribute more than the minimum required to their pension.

Yet women are concerned about their retirement - 48% of women aren’t confident they’re saving enough for retirement, compared to just 28% of men. Lower earnings mean lower contributions and less in retirement which only helps widen the gap.

Clare Moffat, Head of the Intermediary Development & Technical Team

Why is there still a gender pension gap?

There are a variety of reasons, and there will be for many years to come. Our gender pension gap report has more detail on this, but I want to look at two areas in particular. These are:

1. Caregivers

It’s perhaps no surprise that women are still more likely than men to work part-time. They also provide twice as much unpaid childcare than men.4

As a mother of three, when my now teenage children were small, people were often surprised that my husband and I both worked full time but shared childcare by working flexibly. There’s almost a presumption that mothers will work part time and our research finds that family is a far greater motivator for women than men. Almost half (47%) of women considered their family to be a top life priority versus just 36% of men.

Women are also more likely to take career breaks to look after children or elderly relatives which can lead to a pause or reduction in pension contributions. This ultimately has implications longer term on the value of their pension savings. Employers are in a great position to help women going on maternity leave understand the impact that reducing hours or taking a career may have on their retirement savings. And employers will need the help of their advisers to help their employees.

2. The menopause

As I’m in my mid-40s, conversations about the menopause are common and it’s great it’s become more normal. But what has the menopause got to do with pensions? Going through the menopause can have a significant impact on women in the workplace. Almost one million women have left employment because of menopause symptoms.5