Evaluation Scotland Wales
The UK Strategy for Financial Wellbeing is taking forward the work of the Financial Capability Strategy Opens in a new window


Understanding the gender pensions gap

Evidence type: Insight i


The gender pensions gap in the UK is driven by differences in pay received by men and women, and by design factors in the current pensions system. It is further exacerbated by the fact that women are more likely than men to take extended career breaks to care for children or older relatives. Analysis of historic labour market participation has shown that only one-in-five women worked mostly full-time between the ages of 16-54. The structure of automatic enrolment can also contribute to the gender pensions gap because it is based on an individual’s pay and men generally earn more over their careers than women.

The study:

This 2019 report from the Pensions Policy Institute assesses the scale of the current gender pensions gap, and models the potential impact of a number of policy suggestions in an attempt to understand whether these policies could be implemented in an attempt to close the gender pensions gap. The report is divided into two sections:

  1. The first part of the report investigates the size of the gender pensions gap and the key elements driving the disparity, as well as their relative importance.
  2. The report then analyses possible policy alternatives, to understand how they may reduce the gender pensions gap.

The Pension Policy Institute’s Economic Scenario Generator (ESG) was used to produce randomly generated future economic scenarios based on historical data and assumptions about long-term rates of return. This output was then used in further models to analyse the range of impacts that hypothetical policies may have on future pension dividends, and how they would influence the gender pensions gap.

Key findings:

  • Women taking time away from work, most commonly to look after their family, is the largest contributory factor to the gender pensions gap. Women are far more likely to take breaks in their career to raise children or look after relatives than men.
  • Women earn an average of 18% less than their male counterparts. Over the working life, this pay differential could contribute to a reduction in pension wealth of 28%.
  • Women with pensions are more likely than men to have saved into Direct Benefit (DB) schemes. This is due to a larger proportion of women working in the public sector, which generally provides DB pension schemes.
  • Working women in their 30s are more likely than men to participate in workplace pensions. However, at later ages men’s participation rates overtake women’s, though this only has a small impact on pension wealth at retirement.
  • There are 50% more women than men currently approaching retirement without a private pension. Of all women in their 50s, 1.2 million have no pension plan in place, and will be reliant on their state pension.
  • In their 60s, the median private pension wealth of women is one-third that of men’s private pension wealth.
  • The state gender pensions gap has been cut by over 70% with the new state pension, with women’s weekly state pension income rising from £126 to £144.
  • To draw the same income during retirement, women would need to have saved between 5-7% more than men by retirement due to living longer.
  • Policies to address the gender pensions gap put forward by the report include:
    • Family carer top-up: A policy targeted at people not in paid work could reduce the gender pensions gap, because a greater proportion of women take time out than men. Policies such as the family carer top-up could help address the pensions gap that is subsequently created.
    • Contributions from the first pound: For both men and women, contributing from the first pound earned rather than from a lower cut-off band imposed through auto-enrolment can result in more pension savings. Because women generally earn less this will have an additional impact on their pension pot.
    • Higher contributions: An increase to the automatic enrolment minimum contributions from both the employer and the employee.
    • Flat rate of tax relief: An increase to the flat rate of tax relief from 20% to 30%.
  • The measures proposed by this report would help reduce the gender gap in younger generations, though older generations may not benefit as much from some of the alternative policies. The family carer top-up would be of particular benefit to the pension pots of young people.

Points to consider:

Methodological strengths and limitations:

  • The analysis methods appear robust and we can be fairly confident that the results are representative of issues concerning the gender pensions gap in the UK.


  • This report is of clear interest to government, policymakers and other stakeholders concerned with policies surrounding pensions, and particularly those looking to address issues around gender inequality.

Generalisability/ transferability:

  • These findings are generalisable to the UK population, and the findings may be transferable to other economies with a similar pensions framework.

Key info

Year of publication
Contact information

Chetan Jethwa, Pensions Policy Institute www.pensionspolicyinstitute.org.uk info@pensionspolicyinstitute.org.uk