The Gender Pension Gap in the UK and EU: Causes and Solutions

The gender pension gap is a significant issue in the UK and EU, with women typically receiving lower pensions than men. According to the UK's Office for National Statistics, in 2020, the average pension for men was £8,200, compared to £5,400 for women.

The main cause of this gap is the difference in career breaks and pay between men and women. Women are more likely to take time off work to care for children, which can lead to a reduction in their pension contributions. Additionally, women often earn lower salaries than men, which means they contribute less to their pensions.

Women also tend to live longer than men, which means they need their pensions to last longer. However, the current pension system often doesn't take this into account, leaving women with a significant shortfall in their retirement income.

The gender pension gap is a significant issue that affects many women. It's caused by a combination of factors, including employment patterns, pension design, and socio-cultural issues.

Women's pensions are lower due to their longer life expectancy, which means they need a bigger pension to maintain their standard of living in retirement. This is a major challenge for women who have spent their working lives earning lower salaries.

Research suggests that disparities in pay rises contribute to the gender pension gap. For every pound earned by men, women earn only 80p, which means they have less money to save for their pension.

Millions of women miss out on workplace pensions because they don't qualify for auto-enrollment. This is often because they work in low-paid or part-time jobs, which are not covered by the pension scheme.

Women who are divorced may also lose out on pension income, which can be devastating for their financial security in retirement.

The way we use shared parental leave can also contribute to the pension gap. If more men took shared parental leave, it could help reduce the gap.

Here are some of the key factors that contribute to the gender pension gap:

The gender pension gap is a significant issue in the UK, and it's essential to understand its context. The participation rate for AE eligible female and male employees across the whole economy in 2021 was 89% and 87%, respectively, giving an AE participation gap of minus 2ppts.

The labour market also plays a role in this gap. Among adults aged 16 to 64, the male employment rate in 2022 was 79%, and the female employment rate was 72%. This means that even though women are participating in the workforce at similar rates to men, they are still earning less and saving less for their pensions.

The total annual contribution into workplace pensions for AE eligible female and male employees in 2021 was £52.0 billion and £62.6 billion, respectively, giving a contribution gap of 17%. This is a significant difference, and it highlights the need for women to take action to address the gap.

Here are some key statistics on the gender pension gap:

The size of the gender pension gap varies according to age bands, and it's smallest for those aged 35-39. However, the gap increases to 47% for those aged 45-49 and then decreases again in the later years of working life. 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.

The average UK pension pot for men and women over 50 holds £84,205 and £39,654, respectively. This means that men have more than twice as much saved in their pension pots as women, setting themselves up for a much more comfortable retirement.

In the UK, the pension gap is a significant issue, with women on average receiving £50,000 less in pensions than men over their lifetime.

The EU's equal pay directive, implemented in 2006, aims to eliminate pay disparities between men and women in the workplace. However, its effectiveness in addressing the pension gap is limited.

According to the UK's Office for National Statistics, women are more likely to take career breaks to care for family members, which can result in a lower pension pot.

Employers in the EU and European Economic Area must calculate the value of benefits and pensions as part of their pay transparency obligations. This is a significant challenge given the complexities of employee benefits and pensions.

The EU Pay Transparency Directive does not provide guidance on how to calculate the value of benefits and pensions, so employers will have to rely on national legislation or their own judgement. This can be a daunting task, especially for companies with a large number of employees.

To make the process easier, employers can take the following initial steps:

By following these steps, employers can better manage the value of benefits and pensions and ensure compliance with the EU Pay Transparency Directive.

The UK has its own set of regulations to address the decline in private pension saving, which was a major concern. Automatic Enrolment (AE) into workplace pensions was introduced in 2012 to make long-term saving the norm.

Since the introduction of AE, an almost equal percentage of women and men save into a workplace pension. However, private pension wealth is not equally distributed, and women have less private pension wealth on average.

The Gender Pensions Gap (GPeG) is a complex issue, and it's essential to understand the context. The GPeG is defined as the gap between the median male and female private pension wealth.

Here are some key statistics to consider:

The Wealth and Assets Survey is the main data source used to understand the GPeG, and it provides a comprehensive picture of wealth in Great Britain.

To tackle the gender pension gap, policy makers need to account for and address the factors that can lead to inequalities, and design gender-neutral retirement savings arrangements. This includes reforming automatic enrollment, introducing additional state pension credit, and making affordable childcare and changes to the tax system.

Researchers highlight that current gaps in pension income reflect labour markets and pension contribution patterns from many years ago, and that people working now may have a different experience when they reach retirement. The COVID-19 pandemic increased the gap, but new flexible work arrangements may offer opportunities for employers to encourage more women to remain in the workforce.

You can take steps to push back against the gender pension gap by using a Retirement Income Calculator to see how much money you could get when you retire, and making sure you're saving the right amount ahead of time. Contribute as much as you can to your pension, and start early to give your pot more potential to grow.

Here are some key strategies to consider:

Remediate gender pay gaps and career differentials that can lead to pay gaps. This is one of the most important things you can do.

Introducing personalized models to show the impact of different working arrangements and career gaps on pay and pensions can be a game-changer.

Unisex rates on annuities, making sure survivor benefits are built in, and indexing all pensions can make a big difference.

Employers can also create greater awareness of the implications of divorce on pensions by introducing clear communications.

Discussing savings, expenditure, and pension arrangements with your partner is crucial to ensure you have scope to save for your own pension.

To fill career gaps, introduce catch up provisions for pension contributions. This can help women who have taken time off to care for children or family members.

Pension credits for carers can also be a great way to support women who have taken on caring responsibilities.

Here are some key strategies to address the gender pension gap:

The gender pension gap is a significant challenge that affects many women's retirement plans. The average UK pension pot for men over 50 holds £84,205, while women have £39,654, which is less than half of what men have.

To push back against this gap, you can take steps to ensure you're saving enough for retirement. Contributing as much as you can to your pension, starting early, and regularly checking your pension pot can make a big difference.

The gender pension gap is not just a UK issue, but a global problem that affects women's retirement security. In the UK, the gap is even more pronounced, with men having more than twice as much saved in their pension pots as women.

According to the OECD, policy makers need to account for and address the factors that lead to gender inequalities in retirement savings. This includes designing gender-neutral retirement savings arrangements and implementing policies that encourage more women to remain in the workforce.

Here are some key statistics that highlight the magnitude of the problem:

These statistics show that the gender pension gap is not just a problem for older women, but also affects younger women who are just starting to build their retirement savings.