Bridging the gender pension gap

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

Many women feel they must reduce their hours to deal with menopause symptoms.  And this is all happening at a time of life when pension contributions are vital to a comfortable retirement.  More help from employers could mean that women don’t leave the workplace at this time or reduce their hours.  I know managers at Royal London have found training on the menopause has helped them to help their team members.

Reducing the gap

Employers can play an important role in helping to reduce the pension gender gap. If they encourage women to consider their pension savings at key life stages, like those mentioned above, by providing access to timely and relevant information women can then make informed choices, while understanding how this might affect their quality of retirement. But many employers will need support from their advisers and also providers. As an industry – we need to be asking what we can do to make sure that women have a better retirement. Otherwise more and more women will continue to be at a disadvantage - with less freedom and choice as they approach and enter what could be a poorer retirement.

Read our full report Bridging the Gender Pension Gap.

¹ ONS, Workplace pension participation and savings trends of eligible employees: 2009 to 2021, 2009 to 2021, June 2022

² ONS, Workplace pension participation and savings trends of eligible employees: 2009 to 2021, 2009 to 2021, June 2022

³ Pensions Expert, Women need to work an extra 18 years to match male pension pots, June 2022

⁴ Research conducted by the Centre for Progressive Policy (CPP) shows women in the UK are providing more than twice as much unpaid childcare per year than men (23.2bn hours vs. 9.7bn hours)

⁵  A guide to managing menopause at work, 2021