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Gender pensions gap: What is it and how can we close it?

Paloma Kubiak
Written By:
Paloma Kubiak

The gender pay gap during their career spirals into pension inequality for women in later life. Here’s how to take charge of your long-term financial future.

The government’s latest UK Gender Pay Gap report revealed that last year, women in the UK were paid 90p for every £1 earned by a man. While we’ve seen measures taken to narrow this gap in recent years, this statistic only tells part of the story of total lifetime wealth generation.

The gender pay gap is a key factor in the less-discussed gender pension gap – a much larger inequality that has significant implications for women’s standard of living in later life. In 2020, Prospect estimated the gender pensions gap stood at a striking 40.3%, and was increasing, rather than decreasing.

How does a 10% difference in pay balloon to a 40% difference in long-term pension wealth? There are a number of contributing factors. Firstly, the pay gap itself means women have less money to put into their pensions and therefore also receive lower employer contributions. Those differences, compounded over 30 years, can lead to substantial differences in total pot size.

Secondly, AIG Life research found that women are three times more likely than men to take time off work to take on childcare responsibilities and 73% more likely than men to permanently leave a job to care for elderly family members.

Motherhood penalty

Due to the gender pay gap, for many couples this decision can make clear economic sense – a woman giving up her job is likely to have a lower impact on overall family finances. However, women coming back to work after taking time out may also suffer the “motherhood penalty” when they return, which often translates into a lower long-term earnings trajectory than their male peers.

Before making such important life decisions, most people will consider the loss of earnings, but they may not always include the impact of lost pension contributions in their assessment. When women stop working, they may also stop contributing to a pension and they will also miss out on employer contributions or matching.

Again, putting less into a pension earlier in life also means that women do not get to benefit from compounding on those investments over time, leading to smaller long-term pots than their peers who do not take time out.

Thirdly, women who may have taken time off expecting they would be able to rely on shared long-term finances with their partner, can subsequently find themselves in a difficult position with a much smaller pension pot after a divorce or separation. As women also tend to have a longer life expectancy than men, that pension pot must then stretch even farther.

Take charge of your long-term financial future

Last year, Moneybox research found that nine in 10 women were concerned about saving for their retirement, while 37% were extremely concerned. Seven in 10 women said they had no idea how much they needed to save for retirement, and a third (34%) feared they’d already left it too late to be able to save what they would need.

While this collectively paints a rather bleak picture, it is possible for women to take greater control of retirement savings, and doing so early in life can make it much easier to save what is needed in the long-term, thanks to the benefits of compounding.

While we must all take accountability and control of our personal financial futures, it is especially important for women given the challenges of the gender pay and pension gaps, and the barriers that have often discouraged women from engaging more directly with their money in the past.


First of all, we need to start by getting comfortable talking about our finances, including pensions and retirement planning, much earlier in life. Financial education is key to driving social change.

While most of us never received any financial education about how to manage our money and plan for the future, sharing experiences and having open and honest conversations. Speaking with family and friends about their experiences and aspirations can be helpful, but it is also important to seek professional financial advice or expertise when making critical decisions.


Current market conditions and double-digit inflation are having a huge impact on the UK economy and all of our day-to-day finances. Although savings account interest rates have risen significantly over the last few months, they are well below inflation, meaning that money in savings accounts is losing value in real terms.

Historically, investing has been one of the best ways to grow your money and offset the impact of inflation. If you have your rainy day fund carefully set to one side and have additional funds that you don’t expect to need for a few years, investing can help make your money work harder for you.

While research shows that women are less likely than men to incorporate investing into their financial plans, many studies have also shown that women are, in fact, better long-term investors – they are more likely to set a strategy and stick to it.


While the existence of the gender pay gap is widely known, our research found that, in the face of the cost-of-living crisis, women were still significantly less likely to ask for a pay rise to get their financial goals back on track (25% vs 33% of men). Do your research and negotiate a salary that adequately reflects your value and contribution. If you don’t ask, you don’t get.


It’s never too early to plan for retirement. The earlier you get started, the more time you have to benefit from compounding and to course-correct if you need to.

We recently learned that only 37% of women know how much they’ve already saved towards their retirement and only 24% believe they are on track for their ideal retirement. It’s worth putting aside a few hours to track down all of your old pension pots and find out where you stand. You can also explore whether consolidating your pots in one place would help you keep track of them, have more control over how they are invested, or potentially benefit from lower fees.

The cost-of-living crisis and recent market turbulence may have led some people to consider temporarily opting out of their pension contributions. However, if you can afford it, continuing to contribute to a pension, even at lower levels, means that your efforts, no matter what size, are boosted by tax relief and employer contributions – it’s essentially free money. In addition, you can continue to benefit from compounding on your enhanced pension pot over the long-term.

Additionally, if you are making a decision to take a break from work, make sure to factor in the impact on your pension. Consider whether your spouse or partner could make contributions to your pension during this time to ensure you don’t end up too far behind.

How can society close the gender pensions gap?

Although there has been some progress made on the gender pay gap, there is still much more that employers can do to improve the landscape for women in the workplace. For example, providing transparent processes, policies, and criteria for decision-making can ensure that employees are clear on what is involved and that managers understand the need for objective, evidence-based decisions that can be reviewed by others. Increasing transparency to promotion, pay and reward processes can also help to reduce pay inequalities.

Both employers and policymakers can also help to raise awareness of the gender pension gap and provide support and information to those who are considering leaving the workforce, to help them consider the potential long-term impact on their pension.

In addition, continued progress towards shared parental leave, either at an individual employer level or through legislative measures, could help more women to stay in the workforce and continue to build their pension savings. Improving access to affordable childcare could achieve a similar effect.

Pension assets are often overlooked in divorce proceedings, and as noted above, this can have significant consequences for women, who usually have smaller pension pots than their spouses. Policymakers could do more to raise awareness of this issue and ensure that women know to ask about these assets.

As we continue to focus – as employees, employers, and as a society – on improving the gender pay gap, we should also broaden our view to make sure that we are also addressing the much bigger gap that remains in pensions, empowering women to tackle these challenges and achieve the financial futures that they deserve.

Caroline Murphree, Moneybox MD, investing, saving & retirement