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First official figures reveal ‘huge gulf’ in pension wealth between men and women

Samantha Partington
Written By:
Samantha Partington

Women’s private pensions are worth 35% less than men’s at the age of 55, laying bare the extent of the gender pension gap.

The difference in the value of private pension savings yet to be accessed, excluding state pensions, was revealed in the Government’s first analysis of the gender pensions gap for retirees aged 55 between 2018 and 2020.

The study also uncovered a gap in contributions made by men and women.

In 2021, around £52 billion was paid into the private pensions of women eligible for automatic enrolment compared with £62.6 billion into men’s pensions – a gap of 17%.

By age group, the gender pensions gap is smallest for those aged 35-39 (10%) and then increases to 47% for those aged 45-49. It then decreases again in the later years of working life.

When looking at those eligible for automatic enrolment, for the age bands 30-34 and 35-39, the pension wealth of female savers eligible to be automatically enrolled is higher than male savers, reversing the gap.

Women in those age brackets have built up more pension wealth that their male counterparts and this is in line with high pension participation of female employees eligible for automatic enrolment.

The gap peaks for those in their forties, before falling back at older ages with women aged 40 to 44 having saved 33% less pension wealth than men.

The figures back up findings from Aviva which noted that the gap between women’s and men’s pension contributions for a 35-39-year-old has risen to 21%.

Career breaks hit women’s pensions

Laura Suter, head of personal finance for investment platform AJ Bell, said: “Women have 35% lower pension pots when they hit retirement age compared to men, showing the huge gulf in pension savings between the two. On average, it means that for every £100 a man has in his pension, a woman has just £65.

“When we drill down into the numbers, it’s not a lack of participation on women’s part, the number contributing to a pension is high. Looking at just auto-enrolment participation women are consistently more likely to be paying into a pension than men.

“But once they hit their 40s and above women significantly drop behind men in their pension savings. A lot of this will be due to women taking career breaks to have children, working part-time around caring responsibilities or the gender pay gap meaning they earn less – which all filters through to lower incomes and lower pension contributions.”

The figures do not include those people who have no pension wealth when they hit retirement age, which Suter says would make the gap even larger as women are more likely to have no pension than men.

‘Profound gender inequalities’

Pension consultancy LCP describe the analysis as a vital first step in tackling profound gender inequalities in pensions” will allow the pension industry to hold governments to account to make sure progress is made to close the gender pensions gap. 

Laura Myers, member of LCP’s gender pension gap working group, said: “Although good progress has been made in recent years in reducing the gender gap in state pensions, the gap in defined contribution pension rights between men and women is steadily growing, and risks replicating the inequalities we saw in the defined benefit world. 

“We look forward to working with the Government and with others across the industry to come up with workable solutions to these longstanding problems.”