IWD 2025: How to Tackle the Gender Pension Gap

As well as celebrating the achievements of women, International Women’s Day (IWD) is an annual reminder to reflect on the progress made and the challenges that persist in achieving gender parity. Despite improvements, women continue to face significant disparities in retirement savings compared to men.

Did you know that, on average, women retire with 35% less pension wealth than men? This stark reality highlights the urgent need to address the gender pension gap. But why does this happen, and what can we do about it?

Understanding the Gender Pension Gap

Recent analyses indicate that the gender pension gap in private pensions remains substantial. According to the UK government’s 2023 report on The Gender Pensions Gap in Private Pensions, the gap between women’s and men’s median private pension wealth stands at 35%.

This disparity isn’t just a coincidence – it’s the result of deep-rooted societal and financial inequalities that affect women throughout their careers. What are the key factors behind this gap?

Why Are Women Retiring with Less?

When it comes to building up a decent pension pot for later life, women currently have the odds stacked against them. Here are the main reasons:

• Career Pauses: Women are more likely to have gaps in their employment history when they have kids, which slows any path up the career ladder and salary increases.
• Care-Giving: Women are more likely to be primary caregivers for children and ageing relatives, which is challenging and rewarding work – just not the kind that pays and comes with a company pension scheme. Career gaps can also happen later in life as women are more likely than men to give up work to look after ageing relatives.
• Part-Time Work: To fit around that childcare, women are more likely to seek part-time work or in lower-paid sectors. Fewer working hours and smaller incomes equal less available funds to contribute to a future nest egg.
• Longer Life Expectancy: As women live longer than men on average, the amount of retirement years they have to pay for is also likely to be longer.
• Financial Literacy Gap: Several studies suggest women are less financially literate. According to the UK government’s Money and Pensions Service this is true by several metrics - awareness, confidence, feelings, experience and trust. Just 36% of women think they understand enough about pensions to make decisions about retirement, compared to 54% of men.
• Wage Disparity: The gender pay gap, which refers to the difference in average pay between men and women, doesn’t help either. According to the Office for National Statistics, the gender pay gap in the UK is currently 15.5%. This means that, on average, women earn 85p for every £1 earned by men, meaning it’s more likely that proportionally less money will be invested by women into their pension funds. Women’s earnings drop significantly when they have children. Research from the Institute for Fiscal Studies found that the gap widens consistently for 12 years after the first child is born, by which point women receive 33% less pay per hour than men:

How We Can Close the Gender Pension Gap – Together

There’s no doubt that ingrained gender roles and unequal opportunities make it harder for women to build a pension pot that’ll give them the future they want. Addressing the gender pension gap requires a multi-faceted approach:

What Businesses and Institutions Can Do

• Policy Reforms: Implementing policies that support equal pay, affordable childcare, and flexible working arrangements can mitigate some of the systemic barriers women face.
• Promote Flexible Working: Support for part-time roles, job-sharing, and remote work can help women maintain their careers while managing caregiving responsibilities.
• Financial Education: Enhancing financial literacy among women can empower them to make informed decisions about savings, investments, and retirement planning.
• Employer Initiatives: Organisations can play a pivotal role by offering equitable pension schemes, promoting gender diversity in leadership, and supporting career development for women.

What Women Can Do

Women can take some things into their own hands to tackle the the gender pension gap too. Here’s how.

• Start Saving Early: Thanks to compound returns (a jargon-y way of saying you earn interest on your interest) even small contributions grow over time. To have a pension is to play the long game, so the sooner you start paying into one, the better.
• Keep Contributing: Try and maintain some degree of contributions, even if a small amount, during career breaks. The compound returns mean any small increase in the fund will reap dividends. But what you’re also doing is creating a saving habit, making it a lot easier to up your contributions when you start earning again.
• Consolidate Your Pensions: It’s rare to have one job for the whole of your life and changing them likely means you’ll be enrolled in several different pension schemes. With different amounts of money in different pots, it’s difficult to see how much you’re saving towards your future. Combining them puts everything in one place, providing a clearer picture.
• Choose a Flexible Pension Provider Some pension companies make it hard to adjust contributions. Choosing a provider like Penfold, which offers flexible payments, ensures your pension adapts to your financial situation.
• Open a Dialogue: Conversations about finances can be uncomfortable but some short term pain might produce some long term shared gain. If you have conversations with your partner about the gender pay gap and gender pension gap, you can ensure responsibilities are weighted fairly for saving for the future. And if you’re single, make sure you have a clear financial plan and are taking steps to prepare.

In Conclusion: A Call to Action

This International Women's Day, we must recognise that closing the gender pension gap isn’t just a women’s issue – it’s a societal responsibility. By implementing policy reforms, supporting financial education, and taking control of our own pension planning, we can create a fairer future. where all people can enjoy a comfortable later life.

Every action counts – whether it's choosing a flexible pension provider, increasing contributions, or simply starting the conversation.

Empower yourself with knowledge. Visit Penfold’s Pension Guides to get started and learn how to make your pension work for you. Here are a couple of guides we'd recommend for beginners:

• What is a pension?
• How to choose a pension fund

Together, we can close the gap and secure a fairer, financially stable future for all women.

With investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice and past performance is not a reliable indicator of future performance.