The gender pensions gap in private pensions

• Context
• The study
• Key findings
• Points to consider

Context

A goal of the Department for Work and Pensions (DWP) is to improve people’s quality of life, by addressing poverty through increased financial resilience. Private pension wealth is not equally distributed between the genders. Women have less private pension wealth on average, compared to men. This publication defines, estimates, and contextualises the Gender Pensions Gap (GPeG) in Great Britain to support efforts towards closing the gap.

The GPeG can be defined in a variety of ways. The DWP has worked across government departments and included suggestions from external organisations to create a new definition for this publication, as follows: the GPeG in private pensions is the percentage difference between female and male uncrystallised median private pension wealth around normal minimum pension age (currently 55) for those individuals with private pension wealth. Uncrystallised private pension wealth includes that which is active or preserved, therefore not in payment.

The analysis is not able to inform about the size of the GPeG among everyone (regardless of availability of private pension wealth) in Great Britain. Nor can it consider the GPeG across the entire pensions system as it does not consider State Pension and supporting pensioner benefits, or estimate the complete pension wealth of the population as it also excludes other financial assets and properties.

The study

The analysis draws on 2 different data sources:

• The Wealth and Assets Survey (WAS)
• The Annual Survey of Hours and Earnings (ASHE)

The WAS is a biennial longitudinal survey of Great Britain conducted by the Office for National Statistics (ONS), covering sources of wealth, including but not limited to Private Pensions. This survey, in the latest round between 2018 and 2020, included 17,500 households. WAS was chosen as a reliable, national statistic which enables monitoring of changes in pension wealth due to its longitudinal character.

The Annual Survey of Hours and Earnings (ASHE) is conducted by the Office for National Statistics (ONS) and is a key source of information on workplace pensions in GB as it collects information on all types of workplace pension: occupational pension schemes, group personal pensions and group stakeholder pensions.

The analysis is complex and a detailed methodology document is also available on https://www.gov.uk/government/statistics/gender-pensions-gap-in-private-pensions/background-information-and-methodology-gender-pensions-gap-in-private-pensions#about-the-statistical-techniques

Key findings

The headline findings include the following:

• According to the most recent data (2018 to 2020) the Gender Pensions Gap in private pensions stands at 35%. When considering only those who are eligible for Automatic Enrolment, the gap is smaller and stands at 32%. The Gender Pensions Gap varies for different age bands and is lowest for people in their thirties.
• The Gender Pension Gap is smallest when considering private pension wealth held by individuals with both Defined Benefit (DB) and Defined Contribution (DC) pension wealth, compared to individuals with only DC wealth or only DB wealth.
• The size of the Gender Pensions Gap has fluctuated and has decreased in 2018-2020 compared to 2016-2018.

Points to consider

• Methodological strengths/weaknesses: The methodology is highly complex and, as the publication is classed as official government statistics, the analysis is subject to rigorous checking for trustworthiness, quality and value. All data sources used have undergone detailed quality assurance processes. DWP analysts have quality assured the analysis and presentation of the findings. The accompanying methodology report notes some limitations that relate to the data sources used and the exclusions from the process.
• Applicability: Of interest to government, policy makers, pensions providers, support agencies and anyone working with women or older people and financial resilience.
• Relevance: Highly relevant because the gender pensions gap reveals a systemic inequity that means that women are less likely to be financially resilient in later life.
• Generalisability: The research is specific to Great Britain and only applies to the specific pension conditions outlined in the report. However, a systemic gender-based pension gap is likely to exist in other markets and the rigorous approach to analysis could be applied to other data sources.