How can we bridge the gender pensions gap?

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Last week, Aegon released an index study which found that women’s financial wellbeing is suffering because of a focus on short-term finances.

Short-term finances include budgeting for children’s clothing, home help costs, and short-term savings. The study found that women are three times more likely to take responsibility for budgeting groceries than men. Only a third of women are responsible for long-term savings.

Nikki Ramskill, a GP and money coach for women known as The Female Money Doctor, says: “All too often the division of money in a relationship becomes linked to ‘traditional’ roles.”

This gender division of responsibilities holds true in male / female households even when the women are the main or equal breadwinners [Aegon financial wellbeing index study].

Steven Cameron, pensions director at provider Aegon, believes this is an “important factor that contributes to women having lower financial wellbeing”.

In a survey by Opinium for Hargreaves Lansdown released in April this year, more than one in 10 people said they leave their long-term finances to their partner to sort out. Women were twice as likely to say this than men, and a quarter of these women said they lose touch with their finances.

“If we’re passing over long-term financial planning to our partner, this comes with serious risks,” says Sarah Coles, personal finance analyst at Hargreaves Lansdown. “There’s a real risk that leaving your future in someone else’s hands means you lose touch with your plans.”

The gender pensions gap


The gender pensions gap is closely linked to the pay gap between men and women. According to a report by The People’s Pension in 2019, there is a comparatively small pay gap before women give birth but grows once women become mothers.

This report showed that the biggest single reason for the gender pay gap is changes to women’s working patterns as a direct or indirect consequence of motherhood. It also revealed that women reduce their hours to look after children and find that their earnings grow at a slower rate than those of men, mainly rooted in a lack of pay and skills progression in part-time work.

Although the gender gap in workplace pension participation was negligible according to Office for National Statistics data from last year, full-time employees were 1.5 times more likely to have a pension than part-time employees. This is often referred to as the 'motherhood penalty'.

In addition, women in their late 50s have around 50% less pension savings than men. However, women on average have longer life expectancies than men. This in turn has implications for the amount they will need to support themselves during retirement. In another survey by Opinium for Hargreaves Lansdown released in April this year, only a third of women said they were confident that they will be able to afford to retire.

Across all ages women have lower levels of pension savings and income than men and, on average, will experience lower standards of living in retirement than men do. Although some changes in working and saving behaviour will most likely reduce the gap in the future, the Pensions Policy Institute suggest there are policy options which could ensure that women are not disadvantaged in retirement.

Ways forward


The PPI believes that one way forward is “higher representation of women and... minority groups on trustee boards and management committees". This could help to push the needs of these groups up on the agenda.

It could also mean that the needs of women with low financial capability are taken into account. Master trust the People’s Pension suggest that one way this can be achieved is through men taking an equal role in parenting and taking equivalent time out of the labour market. Master trust Now Pensions also argues that childcare duties play a large part in the gender pensions gap and has been calling for lower-cost childcare to be made available.