DWP data shows the gender pension gap remains at 35%

When only considering those who are eligible for automatic enrolment (AE), the gap reduces to 32%. 

The size of the GPeG varies according to age bands and is smallest for those aged 35-39 (10%), increasing to 47% for those aged 45-49. The GPeG then decreases again in the later years of working life, with a similar pattern to the gender pay gap of a relatively small gap until the age of 40 when it approximately triples due to different labour market patterns of men and women.

The gap is smaller for those eligible for AE, with the gap reversed between men and women in the age bands 30-34 and 35-39. This means that women in those age bands have accrued more private pension wealth than men and is in line with high participation rates of female employees when eligible for AE. 

Similar to the all savers trend, from age 40, women return to a lower median pension wealth compared to men, with women aged 40-44 having saved 33% less pension wealth than men.

It is important to note the impact AE has had on private pension saving when comparing age bands. A respondent in the age band 30-34 in 2020 might have benefitted from being automatically enrolled since 2012 – most of their working life. 

A respondent in their fifties in 2020 might have worked until their forties without the opportunity to be automatically enrolled. Therefore, they might have begun their private pension saving later in life, increasing the GPeG compared to younger age groups. 

AE continues to see more individuals save into a workplace pension, with more saved in real terms each year.

It’s getting better, but huge differences remain 

While the GPeG has fluctuated over time, the media female pension wealth around normal minimum pension age (NMPA) has increased in real terms since 2006 to 2008.

In 2006 to 2008, this figures was £50,000 of private pension wealth at age 50 to 54 and NMPA was 50 at the time. The equivalent median male had £85,000.

By 2018 to 2020 this had increased to £94,000 for the median female and £145,000 for the median male at age 55 to 59. 

This is a real terms increase of 90% for the median female compared to an increase of 70% for the median male.

While this represents a relative increase in pension for women, the median private pension for women is still 65% that of men.

There’s still some way to go, but insights provided by data will help highlight the causes

Kate Smith, head of pensions at Aegon said: “It’s just not acceptable that the gap sits at 35%, meaning many women are lagging far behind their male counterparts when it comes to retirement provision. 

“Regularly measuring the gender pensions gap should help to inform the impact of future pensions policy, such as the improvements to auto enrolment and wider public policy such as the recent announced expanded free childcare for all under fives.

“This will provide greater insights into the underlying causes of the gap, why it has changed over time and how to address it going forward.”

Megan Rimmer, chartered financial planner at Quilter, said of the figures: “It’s a known fact that women, on average, earn less than men, consequently limiting the amount they can save towards a pension. Moreover, women often have differing work patterns throughout their lives as compared to men frequently due to childcare responsibilities.

“Recent data indicates that among adults aged 16 to 64, the male employment rate in 2022 was 79%, whereas the female employment rate was 72% really illustrating this point.

“The ultimate ramification of this is that the total annual contribution into workplace pensions for AE eligible female and male employees in 2021 was £52.0 billion and £62.6 billion, giving a contribution gap of 17% however this is an even larger gap than the employment rate.”

The government’s extension of 30 hours of free childcare should provide a significant boost to women’s availability for work. By making childcare more accessible, the shared responsibilities between partners could potentially decrease the gender pension gap that usually arises from women taking extended periods off work to care for children.”

Rimmer said she was encouraged by the government’s recent commitment to rectify issues surrounding parents who have not claimed child benefit, thereby missing out on the full state pension amount due to unclaimed national insurance contributions.

She added: “The government intends to legislate to allow eligible individuals to retrospectively claim National Insurance credit. Such initiatives are essential in advancing towards a more equitable state pension system but the private sector still has a long way to go before it closes the pensions gap.”