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The Gender Pension Gap issue

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73% of women make only minimum pension contributions, compared to 58% of men

A significant difference in pension contributions between men and women has been revealed from a recent study[1], highlighting that women are more likely to pay the minimum required amount into their pensions under auto-enrolment.

According to a study, 73% of women contribute the minimum amount (5% of their salary, topped up with 3% from their employer), while only 58% of men do the same. Additionally, 25% of men regularly contribute more than the minimum, compared to 17% of women. Moreover, 10% of men occasionally make extra lump sum contributions, whereas only 5% of women follow suit.

Working days for extended periods

This disparity in contribution levels contributes to the UK's gender pension gap, which is estimated to have be nearly 40% in 2019/20[2]. Women not only contribute less as a percentage of their salary but are also 32%[3] more likely to reduce their working days for extended periods, affecting their earning potential.

Factors like falling below the auto-enrolment threshold, taking career breaks for motherhood or caring responsibilities, and long-term health conditions further impact women's financial futures.

Cultural shifts in recent decades

The difference in contribution levels will ultimately lead to financial inequality in retirement. Even though auto-enrolment has successfully brought over ten million people into the pension system, the current minimum contribution levels are insufficient for a comfortable retirement.

Life stages affecting women's earning power exacerbate the gender pension gap. Despite cultural shifts in recent decades, women still bear the brunt of caring responsibilities for children and vulnerable adults. The government's free childcare offerings may help improve the situation, but further expansion of the auto-enrolment scheme is necessary to make significant progress.

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Source data:

[1] Boxclever conducted research among 6,000 UK adults. Fieldwork was conducted 6 Sept – 16 October 2022. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics.

[2] 'The Gender Pension Gap', House of Commons Library, 4 April 2022.

[3] 'Caught in a gap: the role of employers in enabling women to build better pensions', Phoenix Insights, December 2022.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE). 

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. 

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

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