Is the gender pension gap widening?

Path with rainbow

It’s been over 50 years since it became illegal to pay women less than men, yet women in their twenties today are likely to retire with £100,000 less than men the same age. So if you thought the gender pay gap was a problem, the gender pension gap is twice as big.

Here we are, it’s 2021, and women are still looking at entering retirement with substantially fewer savings than their male counterparts. But this isn’t always the case; at the beginning of women’s careers, the gap stands at 17%. But, by retirement, it’s a whopping 56%.

So, how do these inequalities arise in the first place? And why does the gap continue to get wider the closer retirement gets? To understand the gender pension gap and address the issue, we must look at the key drivers behind it.

What is the gender pension gap?

The gender pension gap is the difference in pension income in retirement for women and men. Effectively, research has found that women must work longer to save the same in their pension pot as men.

According to the Chartered Institute of Insurance (CII), by the time a woman is aged 65 to 69, her average pension wealth is £35,700, roughly a fifth of that of a man the same age.

The Centre of Economics and Business Research found that the latest gender pension gap is £183,936, a £26,673 increase from last year. But why is this, when women contribute a higher proportion of their income (9.4%) into a pension than men (8.3%)?

Why the gap is widening

If we look at just the last year, the stark increase is down to the pandemic impacting the value of pension pots and the capacity to save. Studies also found that women were more likely to lose their jobs or be furloughed, as they are over-represented in low-paid jobs in sectors such as hospitality, leisure, and retail.

However, this isn’t just a new thing caused by the pandemic; it’s been a problem for a while and only getting worse.

To help us understand why the gender pension gap could be widening, the CII have identified some key moments that matter in the lives of young British women today and the different risks women get exposed to at each of these moments.


Women are more likely to enter the labour market with higher qualifications than men, yet they earn less per hour from the start. Data collected by the Higher Education Statistics Agency (HESA) show that 15 months after leaving university, men received 10% more on average than women. And a wide pay gap persisted amongst those with similar qualifications.

Student debt also becomes harder to pay off for women when we consider pay gaps, caring responsibilities, and part-time working.


Women are also over three times more likely to work part-time than men. And part-time jobs are usually less well paid with fewer progression opportunities.

In addition, the CII identified that women make up most of the administrative and secretarial positions, who are at higher risk of being made redundant through automation.

Despite the Equal Pay Act coming into force in 1970, 51 years later, a pay gap remains. And in 2018, the World Economic Forum reported that it’s going to take 202 years to close the gender pay gap.

And this is where the gender pension gap begins. Workplace pension contributions are typically a percentage of salary. So, whilst workers may be paying the same in percentage terms because their salaries differ, the monetary amount for women will be lower; last year, men paid on average £3,184 into their pension fund, compared to £2,340 by women.

With age, the pay gap only widens, with the average annual salary of women working full-time in their fifties being 23% less than for men of the same age.


Divorce and separation present a risk for women who potentially have fewer assets and lower earnings than their partners.

Over 100,000 marriages break down each year, causing a drastic change in financial circumstances and intensifying financial pressures.

Pensions might get overlooked, undervalued, and misunderstood during divorce proceedings. But they can be as valuable as a house, so the split should be fair.


It is more typical for women to have breaks in their career while they work part-time or work flexibly to balance family life, creating what’s known as the motherhood and caring penalty. Not only does this impact their take-home pay and their savings capacity, but it has a significant knock-on effect on women’s pension contributions and their long-term retirement savings.


At retirement, there is a rising number of households with dependent children. And younger women are also carrying a care burden as their elderly parents may need physical and financial support with them living longer and experiencing longer periods of ill-health.

What can we do to close the gap?

Following changes to the Equality Act in April 2017, companies with more than 250 employees must report their gender pay gap figures by the end of the financial year.

Then in 2019, the government published a Gender Equality Roadmap, but it’s still not enough. It’s clear more needs done at all levels – government, workplace and personal – to make any significant changes to the gender wealth gap.

At a personal level, below are some things you could be doing to boost your retirement savings.

Start saving early

The key to growing a healthy pension pot is to start as early as you can. Part of our financial planning mission is to educate, so here are our tips for talking money if you want to start a conversation about finances with your loved ones.

But it’s never too late, as cliché as it sounds, every little does help!

Increase pension contributions

If you’ve opted into automatic enrolment, you’ll be required to make a minimum contribution of 8%. You contribute 4%, your employer contributes 3%, and you get 1% tax relief.

But this is a minimum! Both you and your employer could decide to contribute more, so make the most of that opportunity.

The annual allowance is currently £40,000, and you can receive tax relief up to 100% of your earnings. As such, your pension pot is your most tax-effective savings account – make the most of it.

Be proactive & plan

Retirement is now viewed as the third age of our life because we have more active years to enjoy free of work stress and responsibilities. But to be able to live our retirement dream, we need to save for it. And you’re not going to be able to save enough without putting in some groundwork.

If you know you’re planning to take a career break, you could pay more into your pension before you leave to make up for the loss of employer contributions further down the line.

And don’t forget you can save up to £2,880 into a pension each new tax year if you aren’t working. And the government will add £720 to this through tax relief.

To fund the retirement you want, you’ll have to plant some of your seeds and regularly water them too. There are different pension products that you could be saving into to help boost your retirement savings. To help, we’ve put together a complete guide to the different types of pension schemes.

Check your state pension

Data is power, so make sure you have a good handle on what State Pension you are likely to receive. You can check your National Insurance (NI) record here. You need a total of 35 years of NI contributions to receive the full state pension. But you can top up any gaps if you have some missing.

What’s more, you don’t have to take it if you don’t need it. Every nine weeks that you delay your state pension, it increases by 1% – that adds up to just under 5.8% for a year!

If you have any questions or want to check how your retirement savings are shaping up, please feel free to get in touch with us any time to have a chat with one of our retirement planning experts.