5 ways to close the gender pension gap

Most people undersave for retirement, but women in particular are at risk of pension shortfall due to the gender pension gap. It is one of the biggest inequalities women face when it comes to wealth, with the average woman retiring with a pension pot that is around 45% smaller than a man’s.

Pension wealth data published by the Office for National Statistics (ONS) in January 2025 shows that, between 2020 and 2022, the average man had £191,600 at retirement age. Meanwhile, the average woman had £106,300 – a gap of £85,300, or 45%.

These figures were the median values among those aged 65-74, but ONS data shows that the pension gap begins from the very moment women enter the workplace. There is a 26% gap between men and women in the 16-24 age group, which widens to a 45% gap among 25-34 year-olds.

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“Women still face multiple and systemic hurdles when it comes to building pension wealth, said Camilla Esmund, senior manager at investment platform Interactive Investor. “They are more likely to work part-time or take time out of the workplace to care for loved ones, leading to a lifetime of lower contributions and the potential for a smaller pension pot in retirement.”

This often comes at both ends of their career, with women disproportionately taking up the mantle to care for both young children and elderly parents. A lack of flexibility and understanding can also force some women out of the workplace in their 40s and 50s as they deal with the medical implications of the menopause – often at a point in time when they are reaching the top of the corporate ladder.

When you consider that the average woman already earns less as a result of the gender pay gap, the problem is twofold. Their contributions are smaller in the first place, followed by extensive periods of time where some women are unable to make any pension contributions at all as a result of career breaks.

The effect of the pension gap also snowballs over time thanks to investment compounding, also known as “returns on returns”. Esmund explains that “even a small income gap early in a career can translate into a massive wealth gap by retirement”.

While the onus is on policymakers and employers to create a fairer environment for women saving for retirement, there are also some steps you can take to boost your own financial resilience. As International Women’s Day approaches on 8 March, there is no better time to start implementing these good habits.

Average pension pot by age for men and women

Data from the ONS reveals the average pension pot value for men and women of various ages. As you can see, the pension gap starts from the moment women enter the workplace but widens from their mid-20s to early-30s, when many women take maternity leave or a career break to care for young children.

“Given the average mother in the UK is 30.9 years old, if [their pension contributions] become sporadic or are paused altogether, that is 36 years of potential compound interest over time that women are missing out on, ultimately leading to a substantial shortfall in their final retirement pot,” said Carina Chambers, pensions technical expert at digital wealth manager Moneyfarm.

^{Source: ONS survey of total household wealth in Great Britain (April 2020 to March 2022), published January 2025.}

Five ways women can boost their pension

1. Start building your pension at a young age

Building wealth is less about timing the market than time in the market, as the old adage goes. As such, you should start building your pension as early as possible, even if retirement feels a long way off.

Under auto-enrolment rules, UK employers are legally obliged to provide an employee pension scheme and, as soon as you start working, you will be automatically enrolled (provided you are 22 or older, and earn at least £10,000).

You will automatically start contributing 5%, and your employer is obliged to contribute a minimum of 3%. You are free to opt out or to reduce your 5% contribution, but doing so could mean that you lose your employer contribution too, which is essentially ‘free’ money.

It will also mean that you miss out on the opportunity for valuable investment returns, which should snowball over the course of your investment horizon due to compound returns.

2. Increase your pension contributions

As well as maintaining your 5% pension contribution, you should consider upping your contributions, if you are able to.

Investing consistently and over a long time horizon is the best way to build wealth. And while it might be tempting to stash the cash in your bank account where you can easily access it, the data shows that investment returns almost always beat cash over the long run, even when interest rates are high.

Even boosting your pension savings by a small amount could make a big difference by the time you reach retirement. Research published by financial services company Standard Life in 2024 showed that rounding your monthly pension contributions up to the nearest £100 could boost your pension by £64,000 in retirement.

Standard Life’s calculations assume a starting salary of £25,000 from the age of 22, 3.5% salary growth per year, and 8% pension contributions under auto-enrolment rules (5% employee, 3% employer). They also assume investment growth of 5% and an annual management fee of 1%.

The research does not factor in the impact of a career break, but women should find that upping their contributions during the years they are working helps reduce the effect of a break overall.

3. Find out if your employer will match your pension contributions

If you pay more into your pension, then it is worth noting that some employers will match your pension contributions up to a certain limit. Take hold of this opportunity if you have the chance. Again, it is essentially free money and can help you narrow the pension gap.

4. Pay into your pension while on maternity leave, if you can

Women often take time out for maternity leave or to take on care-giving responsibilities, and this can create a large dent in their pension pot.

When you go on maternity leave, your employer will continue to make contributions to your pension based on your salary before you went on leave. However, your contributions will be based on your maternity pay (which is likely to be less).

Also, while employer contributions are guaranteed for the first 26 weeks of your maternity leave (Ordinary Maternity Leave), you will only be entitled to them for the next 26 weeks (Additional Maternity Leave) if you are still receiving maternity pay.

If you can afford to, you should continue contributing to your pension throughout your maternity leave. If possible, try to maintain the contributions you were making before you went on leave, rather than allowing them to fall to a percentage of your reduced maternity pay.

5. Can your partner top up your pension contributions?

If you take time out of work to carry out caregiving responsibilities, such as looking after young children, speak to your partner to find out whether they can contribute to your pension during this time.

It could be worth having this conversation before deciding to have children to ensure you are on the same page when it comes to your finances. Recent research from Moneyfarm revealed that 42% of men would not be prepared to pay into their partner’s pension while on maternity leave, with 27% saying the woman’s pension is her own responsibility.

“These figures highlight a significant gap in financial support and shared responsibility within households,” said Chambers. “Encouraging open conversations about financial planning and the importance of supporting each other's long-term financial goals is a step towards achieving true gender equality. By working together, we can ensure that all women have the financial security they deserve, both during maternity leave and beyond.”

It is also worth remembering that a pension is a tax-efficient way to save and invest for retirement. As such, topping up a spouse’s pension is a good way to shield your collective wealth from the taxman.