The UK gender pensions gap in private pensions stands at 35%, according to new data from the Department for Work & Pensions (DWP)
When considering only those who are eligible for automatic enrolment, the data for the period between 2018 and 2020 shows a smaller gap of 32%.
This is down from the 42% gap reported in 2006-2008 when it was at its highest, before auto-enrolment increased the number of lower paid workers paying into workplace pension schemes.
According to the latest data, the size of the gender pensions gap varies by age. The smallest gap is for those aged 35-39 (10%) and then increases to 47% for those aged 45-49.
The gender pensions gap decreases again in the later years of working life.
The DWP said this pattern is similar to the trajectory of the gender pay gap, which shows a relatively small gap until the age of 40 when it approximately triples due to different labour market trajectories of men and women.
For those eligible for automatic enrolment, the gap is smaller compared to the population-wide metric throughout all age bands.
For those aged 30-34 and 35-39, when the gender pensions gap of all savers is smallest, DWP said the pension wealth of female savers eligible to be automatically enrolled is higher than male savers, reversing the gap.
This means that women in those age bands have accrued more private pension wealth than men and is in line with participation rates of female employees when eligible for auto-enrolment.
The data showed that for all savers, from the age of 40, women return to lower median pension wealth compared to men, with women aged 40-44 having saved 33% less pension wealth than men.
In 2021, the data shows that around £52bn was paid into the private pensions of women eligible for auto-enrolment, compared with £62.6bn into the pensions of men.
This increased from 2012, when women eligible for auto-enrolment saved £33.2bn and men saved £48.5bn. However, despite this, the total contribution gap for all female employees compared to all male employees is 17%.
Vital first step
Although a large number of reports have been published on the topic of the gender gap, this is the first time the UK government has attempted to assess the scale of the problem, and has also committed to monitoring the issue on an ongoing basis.
Laura Myers, member of LCP’s gender pensions gap working group, said the publication of these statistics represents a “vital first step in tackling profound gender inequalities in pensions”.
She said: “Not only does this report put the issue firmly on the government’s agenda, but it means we will be able to hold governments to account to make sure that progress is made on the yawning gap in pension rights between men and women.
“Although good progress has been made in recent years in reducing the gender gap in state pensions, the gap in DC [defined contribution] pension rights between men and women is steadily growing, and risks replicating the inequalities we saw in the DB world.”
Systemic workforce and societal issues
Joe Dabrowski, deputy director of policy at Pensions and Lifetime Savings Association (PLSA), said the statistics published by DWP today highlight how systemic workforce issues and societal issues, which result in women having, on average, lower earnings and more career breaks for child and elderly care, also lead to lower pensions savings.
He said: ”Although it is positive that the number of male and female savers has become more equalised as a result of automatic enrolment, there is still more to be done – our research indicates that many women are still falling short of the PLSA’s Minimum Retirement Living Standard.
“Additional policy initiatives are needed to support women, and those in other under-pensioned groups, including gig economy workers, the self-employed and others. We need to enhance the pensions system to ensure that the value of the state pension is maintained, more people are brought within the scope of automatic enrolment and contributions are increased over time.”
Committed to understanding saver inequalities
Louise Davey, director of policy, analysis and advice at The Pensions Regulator (TPR) said TPR is “committed” to working with industry and government to undersdant saver inequalities and create workplace pension system that works for everyone.
She said: ”We welcome the publication of the new official gender pensions gap metric which will help focus the efforts of industry, regulators, government and employers on narrowing the gap.
“The successful roll-out of auto-enrolment has had a huge impact on the savings landscape, driving up the number of people saving up for their retirement, including many women for the first time. In our role as regulator, we will continue to use our compliance and enforcement powers to protect savers and ensure all eligible workers get the pension they are entitled to.”