Women would need to work an extra 19 years to close the gender pension gap

• In order to close this gap, a woman would need to start pension saving at just three years old, to retire with the same amount of money as working men.  
• Career gaps owing to childcare and other factors result in an average ten-year career gap for women, amounting to £39,000 in lost pension savings. 

By the time women reach retirement age (67), they will have average pension savings of £69,000. This is £136,000 less in pension savings than the average man, who will have saved £205,000 in the same period, according to a new report launched today by UK pension provider NOW: Pensions in partnership with the Pensions Policy Institute (PPI).

The 2024 gender pension gap report finds that for women to retire with the same amount of money in their pension savings as a man, they would need to work and save for an extra 19 years on average.

As automatic enrolment starts at 22, this means that by age three, girls are already falling behind boys in their provision for later life.  

“It’s hard to believe that by the time a young girl starts school at four, she will already be falling behind a boy of the same age when it comes to providing for her retirement. Yet this is the reality many girls face as they leave education and enter the world of work,” says Joanne Segars OBE, Chair of Trustees at NOW: Pensions.

Women make up 79% of workers who earn less than the automatic enrolment earnings threshold – this means that 1.9 million women in employment are not automatically enrolled into a workplace pension.

If both age and earning thresholds were removed from automatic enrolment, an additional 885,000 young women in employment would become eligible for a workplace pension. 

“Despite enacting some important policies in recent years to improve financial opportunities, outcomes and equity between men and women – like auto enrolment and gender pay gap reporting – our report is a timely reminder of the work that still needs to be done. We believe it can and it must,” says Segars.

Working, childcare and career gaps  

On average, women spend 10 years away from the workforce to raise families or take on other caring responsibilities. This career gap amounts to an average of £39,000 in lost pension savings.  

Furthermore, the spiralling cost of childcare is a hindrance to many working households, with the average cost of full-time nursery for a child under age two in 2023 being £14,800 a year, and in London the average annual nursery fees are £20,000 or more per child. Consequently, by their late 50s, women will have built up just 62% of the pension wealth of men. 

Pensioners in poverty 

On average, women live around seven years longer than men, meaning women’s pension wealth needs to go further. A lifetime of earnings and other inequalities results in two thirds of pensioners currently in poverty being women, with single women making up half of this number. 

NOW: Pensions’ 2024 gender pensions gap report suggests policy proposals to narrow the current savings gaps to help savers achieve the retirement they deserve.  

Act now

Lizzy Holliday, Director of Policy and Public Affairs, NOW: Pensions acknowledges that policymakers have made important decisions in recent years which are already making a “substantial difference” to the way workers and their employers are providing for retirement.

“Yet, as our research shows, the scale of the gender pensions gap remains vast and will require bolder policy actions. Some of the solutions are broader than traditional pension policy,” she says.

Childcare and gender pay gap issues must be given the urgent attention they require.  But setting out the roadmap for the future of auto enrolment including tackling the difficult issue of adequacy in retirement – which affects women disproportionately given lower pension wealth- should be front and centre of next steps.

“While there are some pensions policy options that could be introduced to potentially mitigate the Gender Pension Gap, it’s unlikely to significantly reduce without changes in labour market conditions and gendered divisions of domestic labour,” says Lauren Wilkinson, Senior Policy Researcher, Pensions Policy Institute.

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