UK pension system short-changing women, claims research by NOW: Pensions and Pensions Policy Institute

  • Exclusive preview of new research from the Pensions Policy Institute (PPI) and NOW: Pensions reveals that women have 55% lower pension income than men in retirement
  • 3 million women are missing out on workplace pensions as they don’t meet eligibility criteria for auto enrolment
  • Policy reform to include second jobs in auto enrolment earnings would benefit 60,000 women


To coincide with the first International Women’s Day of the 2020s, NOW: Pensions reveals that the pension system is still short-changing women. The research by PPI, part of a wider report on under-pensioned groups being released later this spring, reveals that, on average, women in retirement have 55% lower pension income than men.

The average annual private pension income¹ for men aged 65 and over is £8,620 – for women it’s £3,920. This represents a gap of £4,700 or a 55% decrease. That’s despite a record number of women being in employment (72.4%²) – the highest since records began.

This is because women are more likely to work part-time in their career while caring for children or further down the line to care for elderly relatives. The result is both interrupted pension contributions and limited earning opportunities, and consequently a pension pot £100,000 less than the average man’s.

Inequalities experienced during working age life are also associated with lower incomes in later life. The gender pay gap means that women working full-time still earn almost £6,000 less than men – with an average annual income of £24,150, compared with £29,980 for men.

Part-time pensions penalty
While auto enrolment into workplace pensions has been a success, taking 10.2 million more people into pension saving, it has yet to compensate for the gender pensions gap. As explained above, one reason for the gap is that more than one third of women (36%) currently work part-time.

Of the 13.4 million employed women in the UK, around 3 million (23%) fall below the qualifying earnings threshold of £10,000 for automatic enrolment, in comparison with just 12% of male workers.

Baroness Jeannie Drake, one of the architects of automatic enrolment, says: “Millions of savers miss out on workplace pension contributions when they are caring for children or elderly relatives. This is why I lodged an amendment in the Lords to the Pension Schemes Bill just last week, seeking a review by the Secretary of State of how auto-enrolment provisions could address the pension penalty in retirement that relevant carers experience.

“A ‘carer top-up’ for those who are missing out on workplace contributions would make a real contribution towards their pensions. This would help approximately three million women, in addition to 300,000 men, to top up their pension savings whilst taking time out of work to be carers.

“I sincerely hope that the government is receptive to the amendment and recognises that we need to act to help more women save for their own futures and close the gender pensions gap.”

Holders of multiple jobs miss out
The underpensioned report will also highlight other opportunities for reform. Including income from additional jobs, for example, would push an additional 80,000 people over the £10,000 threshold for auto enrolment – 60,000 of whom would be women.

Combining the income from multiple jobs would require root and branch reform of auto enrolment but would allow many low earners to start saving into a workplace pension.

Joanne Segars, Chair of Trustee at NOW: Pensions commented: “Auto enrolment has been a great initiative in helping over 10 million people saving for retirement, But the £10,000 eligibility criteria is penalising many women who simply don’t earn enough, often because they’re working part-time whilst they are caring for the younger and older family generations.

“While auto enrolment continues to give workers the head-start they need to prepare for retirement, policy and regulation around saving for retirement need to better reflect the changes in the workplace and society. The focus now needs to be on making it fairer for everyone who is trying to save for their future and accommodate the millions of women who are locked out of the current pension system.

“We are hugely supportive of Baroness Jeannie Drake’s family carer top-up and want the Government to act now to accommodate a fairer pension system for women with two or more part-time jobs.”

Notes to editors
¹ Not including state pension.
² ONS, Employment in the UK: February 2020.

More information

Samantha Gould – NOW: Pensions
Email: pressoffice@nowpensions.com
Instinctif Partners
Email: nowpensions@instinctif.com