Women would need to work an extra 19 years to close the gender pensions gap

A young girl stands with her arms crossed
  • Today, women retire on average with pension savings of £69,000, compared to £205,000 for men, new research by NOW: Pensions and PPI reveals.
  • In order to close this gap, a girl would need to start pension saving at just three years old, to retire with the same amount of money as working men.
  • Career gaps owing to childcare and other factors result in an average ten-year career gap for women, amounting to £39,000 in lost pension savings.

A new report launched today by UK pension provider NOW: Pensions in partnership with the Pensions Policy Institute (PPI) reveals that by the time women reach retirement age (67), they will have average pension savings of £69,000. This is £136,000 less in pension savings than the average man, who will have saved £205,000 in the same period.

The 2024 gender pensions gap report finds that for women to retire with the same amount of money in their pension savings as a man, they would need to work and save for an extra 19 years on average. As automatic enrolment starts at 22, this means that by age three, girls are already falling behind boys in their provision for later life.

Women make up 79% of workers who earn less than the automatic enrolment earnings threshold – this means that 1.9 million women in employment are not automatically enrolled into a workplace pension. If both age and earning thresholds were removed from automatic enrolment, an additional 885,000 young women in employment would become eligible for a workplace pension.

Working, childcare and career gaps

On average, women spend 10 years away from the workforce to raise families or take on other caring responsibilities. This career gap amounts to an average of £39,000 in lost pension savings.

Furthermore, the spiralling cost of childcare is a hindrance to many working households, with the average cost of full-time nursery for a child under age two in 2023 being £14,800 a year, and in London the average annual nursery fees are £20,000 or more per child. Consequently, by their late 50s, women will have built up just 62% of the pension wealth of men.

Pensioners in poverty

On average, women live around seven years longer than men, meaning women’s pension wealth needs to go further. A lifetime of earnings and other inequalities results in two thirds of pensioners currently in poverty being women, with single women making up half of this number.

NOW: Pensions’ 2024 gender pensions gap report suggests policy proposals to narrow the current savings gaps to help savers achieve the retirement they deserve.

Joanne Segars OBE, Chair of Trustees at NOW: Pensions said: “It’s hard to believe that by the time a young girl starts school at four, she will already be falling behind a boy of the same age when it comes to providing for her retirement. Yet this is the reality many girls face as they leave education and enter the world of work.

Despite enacting some important policies in recent years to improve financial opportunities, outcomes and equity between men and women – like auto enrolment and gender pay gap reporting – our report is a timely reminder of the work that still needs to be done. We believe it can and it must.

Our research is an important step in identifying, defining, and addressing the problem and what we can do as a society to fight for fair pensions for all.”

Lizzy Holliday, Director of Policy and Public Affairs, NOW: Pensions comments: “Policymakers have made important decisions in recent years which are already making a substantial difference to the way workers and their employers are providing for retirement. Yet, as our research shows, the scale of the gender pensions gap remains vast and will require bolder policy actions. Some of the solutions are broader than traditional pension policy. Childcare and gender pay gap issues must be given the urgent attention they require. But setting out the roadmap for the future of auto enrolment including tackling the difficult issue of adequacy in retirement – which affects women disproportionately given lower pension wealth – should be front and centre of next steps.”

Lauren Wilkinson, Senior Policy Researcher, Pensions Policy Institute said: “While the Gender Pension Gap is widely recognised, there is a lack of clear consensus in terms of definition, magnitude and potential solutions. Measures of pension wealth and retirement income can both be useful to understanding the magnitude of the gap, but the approach taken in this year’s edition of the underpensioned report provides a more nuanced analysis of the causes of the gap.

By their late 50s, women have average pension savings worth less than two-thirds of men’s, with a substantial proportion of this difference stemming from inequalities in the labour market, including differing working patterns and the Gender Pay Gap. While there are some pensions policy options that could be introduced to potentially mitigate the Gender Pension Gap, it’s unlikely to significantly reduce without changes in labour market conditions and gendered divisions of domestic labour.”

Learn more about how NOW: Pensions are working to raise awareness and lobby for change for a fairer pension system to enable all pension savers to enjoy the retirement they deserve.


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Notes to Editors

NOW: Pensions’ policy proposals for a fairer UK pensions system

  1. Remove the £10,000 auto enrolment trigger
    Currently, employees only qualify for auto enrolment once they earn more than £10,000 per year through one employer. This excludes many women who hold multiple jobs, work part-time or as freelancers.
  2. Remove the lower earnings limit
    Pension contributions are only taken once the qualifying earnings amount of £6,240 has been deducted. This means an employee earning £10,000 will contribute 5% on as little £3,760. The Pensions Extension Act provide DWP with the power to changes this by regulations – the next procedural steps to deliver this, a consultation, is needed urgently.
  3. Introduce a family carer’s top-up
    Career interruptions have a major impact on pension wealth. A family carer’s top-up would see those taking time out of work paid at the equivalent of an employer’s contribution at the same level as the National Living
  4. Considering pension pots on divorce
    In many cases, pension savings are often the second most valuable asset after a home. This is why it’s essential women understand this when settlement terms are being negotiated. In a divorce situation sharing pension savings could play a huge role in narrowing the GPG.
  5. Ensure affordable childcare is available for those who want to return to work
    The cost of childcare prevents many women from returning to work. Making it more affordable and accessible will allow those who want to return to work to do so.

About NOW: Pensions

NOW: Pensions is an award-winning UK workplace pension provider. We look after the pension savings of millions of members on behalf of tens of thousands of employers from a wide range of industries.

We have a clear mission – to help everyone save for a more financially secure future. This means achieving the best financial outcomes for our own members, while fighting for a fair pension system to enable all pension savers to enjoy the retirement they deserve. We do this by highlighting pension inequalities and campaigning for change.

We are the UK’s third largest auto enrolment pension provider by number of members.

NOW: Pensions is part of the Cardano Group. Cardano Group is a market leader in providing risk and investment management services designed to make pension outcomes more stable and robust.