Why do women have half the pension of men?

 March 04, 2022

It’s a sobering fact that in the UK, women aged between 65 and 74 years old will have saved half as much money for retirement as men the same age, according to analysis conducted by Scottish Widows to mark this year’s International Women’s Day. The analysis reveals that women in this age group will on average have pension savings worth GBP 130,000, whereas men will retire with GBP 260,000 in their pot. 

While the gap between the proportion of men and women saving adequately – defined as putting away a minimum of 12% of their salaries – disappeared for the first time on record in 2021, for older women these recent improvements have had limited impact. 

Because women are more likely to work part-time, in lower paid industries, and take more time out to bring up their families, a woman will need to work an extra 37 years to allow her to have a pension pot the same size as her male counterpart.

Addressing the gender pension issue

Scottish Widows is passionate about addressing the gender pension issue and report on this every year in its Women and Retirement Report to update the trends and also make recommendations for pensions policy reform. For more information on the issue, read the report.

Should we be focusing on fixing the gender pay gap before we tackle the pensions one?

Scottish widows women;s retirement

Both things need to be addressed and gender pay is not the only issue driving the gender pensions gap. To examine this further, we can see that women tend to earn less money during their working lives – on average 35% less, with median salaries for men of GBP 31,400 compared to GBP 20,500 for women.

What we can start to see are some broader systemic challenges in the way childcare and domestic responsibilities are divided, where women are more likely to have a much more fragmented career with time out of the workplace for maternity and caring responsibilities. After having a child, nearly two thirds of women who return to work do so on reduced hours.

We are beginning to see more ‘modern family’ sets ups but the nuclear family is very much the status quo, where one fulfills the caring role and the other is the primary breadwinner. Even where both parents are working full-time, a disproportionate amount of the childcare responsibilities and funding the childcare often fall to the woman.

There is still a long way to go to shift from these societal norms and we won’t change them overnight, but progress is possible. For example, ensuring women have equal career opportunities from the moment they finish education, improving flexibility in work by providing better maternity and paternity support, and making childcare more affordable, will all help to close the earnings gap.

When it comes to the pensions gap, Scottish Widows is reiterating its demand to scrap the earnings trigger, which is the minimum amount an employee must earn to qualify for automatic enrolment into their workplace pension. It is also campaigning for the scheme to be evolved so that the minimum age is lowered from 22 to 18 and default contributions are raised, all of which would help close the gap.

Could we be heading towards a pension's crisis for women?

It’s something we all want to avoid, but there is a risk. Women are entering retirement with far fewer assets than men, and those assets have to stretch further. Alarmingly the average 25-year-old woman would need to save an additional GBP 1,400 a year to close the savings gap with the average man. We need to support women to become more confident when it comes to their all their finances, not just pensions.  

Scottish Widows is very active in this space as part of International Women’s Day and has recently partnered with Smartpurse, a financial wellness service, through which it is offering a range of resources including online financial health check tool, Money School bite size courses and self-guided programmes to help women take charge of their financial futures. 

Are you in charge of your finances? Ensure a safe and financially secure future and help address gender equality and bridge the savings gap!

1. Source: ONS Wealth & Assets Survey: Private pension wealth (active, preserved or in payment), summary statistics by age & sex


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