Urgent action needs to be taken to address the UK’s gender pension gap.

New research by L&G shows that it has barely changed since 2020, and in some age groups and sectors has deteriorated further.

Data from 2021 shows the gender pension gap is 16 percent at the beginning of women’s careers, reaching 55 percent at the point of retirement, a minor change from 2020.

Average pension pot of a woman at retirement (£12,000) found to be less than half that of a man (£26,000) at the same retirement stage.


Financial disadvantages

Women are left with smaller pension pots at every stage of their career, with the situation worsening significantly as they approach retirement.

The research, which analyses data from more than 4.5 million members across L&G’s defined contribution (DC) pension scheme clients, shows that women are always at a financial disadvantage, even at the start of their careers.

The initial gap of 16 percent widens as women reach their forties, accelerating to 31 percent as the impact of career breaks and unequal caring responsibilities begin to take effect.

By the time people can take their tax-free cash at 55, the gap is over 50 percent and deteriorates further to 55 percent by retirement.

This new data for 2021 shows the gender pensions gap has decreased marginally across age ranges, but by only one percentage point for the start and end of women’s careers.

On the current trajectory, women will still be retiring with vastly smaller pension pot sizes than men for many decades to come.


Why there is an issue in the first place

There are many reasons identified for the gender pension gap, including the fact that women are still paid less and are less likely to be in senior leadership positions, resulting in lower pay and lower pension contributions.

They are more likely to take career breaks for childcare or as an unpaid carer and are more likely to work part time or reduced hours, as well as self-identifying as having lower fiscal confidence.

The high cost of childcare in the UK is a barrier to women returning to work after maternity leave, or returning full time, and the means test on benefits can be a driver for capping hours, particularly in certain industries.

In addition, 900,000 women in the UK retire early each year due to menopause, meaning women are leaving the workforce at the exact time when their earning potential is likely at its highest.


What are the challenges women face in saving for retirement?

Reflecting on the challenges facing women who are saving for their retirement, Katharine Photiou, Commercial Director of Workplace Savings at Legal & General said: “There are many factors that have led us to this point but very few solutions offered. It’s time women stop being penalised for things outside of their control, like the high cost of childcare, or being paid less than their male counterparts.

“We know that women feel significantly less confident, and are more likely to struggle on knowing where to start, when it comes to making financial decisions. Industry and government must therefore work together to ensure education and engagement around savings and investments increase. For example, too few know about the flexibility that couples have in being able to contribute to their partners’ pension while they are on parental leave. This is something that can significantly reduce a women’s pension shortfall.”










Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.