Data shows gender pension gap is growing

Consultancy group Broadstone’s latest Wealth & Assets Survey found that there was a “notably smaller proportion of women” who were paying into a workplace DC pension fund.  

It means that the gender pension gap – the difference in median pension savings between men and women – persists and may grow due to “structural issues”, Broadstone warned. 

Roughly a quarter (23%) of men aged over 16 surveyed by Broadstone said they were actively contributing to a workplace DC pension. Across this sample, the median pot size was £10,000. 

However, 19% of women aged over 16 were saving into a workplace DC pension, and the median pot size was just £5,000. 

This gap was most pronounced in the 35-44 age group. A quarter (25%) of women in this age group contribute to a DC pension, compared to 33% of men. The median pension pot size was £12,000 for men and just £6,700 for women. 

Auto-enrolment will not bridge the gap 

Separate research by Interactive Investor has found that the gender pension gap has risen from 25% in 2016 to 46% in 2022 for those aged 45-54, based on data from the Office for National Statistics (ONS). 

For those aged 55-64, women on average have a pension pot that is £89,000 less than men, Interactive Investor reported. 

While automatic enrolment has brought millions of people into pension saving for the first time, ONS pension wealth data shows that 8.7 million women still have no pension savings. This compares to 6.5 million men. 

Camilla Esmund, senior manager at Interactive Investor, said the ONS data showed that “auto-enrolment alone isn’t enough to bridge the gap”. 

“Women still face multiple and systemic hurdles when it comes to building pension wealth,” she said, adding that efforts to close the gender pay gap had “fallen short” in relation to pension savings. 

“The wealth divide is even larger than the income gap because wealth compounds over decades,” Esmund said. “Even a small income gap early in a career can translate into a massive wealth gap by retirement.” 

Gender pension gap ‘accelerating rapidly’

Broadstone highlighted that, once this gap appears, it “accelerates rapidly” so that men aged 55-64 have almost three times as much in their DC savings than women. 

The consultancy cited research from the Pensions Policy Institute (PPI) that found that career breaks due to childcare were a “key driver” of the gender pension gap. When returning to work, women are more likely to take lower paid or part-time roles, which reduces the amount they can save for a pension. This can also damage their ability to progress to higher paid roles in the future. 

“It’s also vital that women have access to tailored financial advice and planning tools to navigate career gaps and understand the importance of early saving in improving retirement outcomes.”

Rachel Coles, Broadstone

The PPI estimated that such career patterns can cut women’s pension wealth by 47%, and Broadstone’s data reflected this finding. 

The company acknowledged that its survey focused on workplace DC pension schemes so did not reflect savings in personal pensions or defined benefit arrangements. 

However, Broadstone maintained that the survey still showed “broader structural issues that are contributing to pension inequality in the workplace”. 

Rachel Coles, workplace engagement consultant at Broadstone, said: “Employers can play an important role by offering greater flexibility around pension contributions during career breaks, for example, while policymakers should explore solutions such as enhanced parental leave policies and better support for returners to the workforce.  

“It’s also vital that women have access to tailored financial advice and planning tools to navigate career gaps and understand the importance of early saving in improving retirement outcomes. 

“Employers can support this by offering financial education that helps female employees plan for any career breaks and take proactive steps to close any savings gaps.”