"We simply shouldn’t still be seeing such a huge discrepancy between men and women’s retirement savings as we move towards the mid 2020s."
The government has published the first official figures on the gender pension gap, estimated to be 35% for private pensions.
Although a large number of reports have been published on the topic of the gender gap, this is the first time that the Government itself has attempted to assess the scale of the problem, and has also committed to monitoring the issue on an ongoing basis.
The gender pension gap, which measures the difference in the amount of private pension wealth held by men and women at around ‘normal minimum pension age’ – currently 55 - (and before the pension has been accessed) is estimated to be 35%.
The figures exclude people who have zero pension wealth.
In 2021, around £52 billion was paid into the private pensions of women eligible for automatic enrolment compared with £62.6 billion into the pensions of men.
By age group, the gap is smallest for those in their thirties, peaks for those in their forties, before falling back at older ages.
In 2006-08 the gap was 42%; it has fluctuated since then, but is currently (2018-20) lower than in 2006-08.
Pensions minister Laura Trott said: “The success of Automatic Enrolment has transformed the UK pensions landscape and brought millions of women into pension saving for the very first time. However, while the participation gap has closed, the wealth gap persists.
“The publication of an official annual measure will help us track the collective efforts of government, industry and employers to close the gender pensions gap and ensure women can look forward to the retirements they’ve worked so hard for.”
Laura Myers, a member of LCP’s gender pension gap working group, commented: “The publication of these statistics represents a vital first step in tackling profound gender inequalities in pensions, and Laura Trott is to be commended for getting this work done within months of coming into office. Not only does this report put the issue firmly on the government’s agenda, but it means we will be able to hold governments to account to make sure that progress is made on the yawning gap in pension rights between men and women. Although good progress has been made in recent years in reducing the gender gap in state pensions, the gap in DC 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.”
Gail Izat, workplace managing director at Standard Life, added: “The gender pension gap is still way too high – we simply shouldn’t still be seeing such a huge discrepancy between men and women’s retirement savings as we move towards the mid 2020s. The pay gap is a major contributing factor, and there’s also the fact that women are more than three times as likely as men to work part time, often as a result of taking on the majority of caring responsibilities within a family. These issues might be beyond the scope of the pensions world, but there are structural changes that could be made within the UK pensions model to help close the gap. Removal of the lower earnings threshold so people start contributions from the first pound of earnings would be a good start, as a higher proportion of female than male workers fall below the current £10,000 starting position. Hopefully the bill moving through parliament to legislate for this, passes, and is swiftly implemented.”
