Part-time workers could end up having £119,000 less in their pension pot at retirement, and even a 10-year part-time phase could lead to a shortfall of £18,000, new research has found, throwing a spotlight on how the pensions system exacerbates financial inequality for women and ethnic minorities. 

 

With the pension system built on traditional male life patterns of full-time employment, those who work fewer hours – often to provide unpaid childcare – miss out on income and employer pension contributions, as well as facing slower career progression, and end up with much smaller pension pots than those who have worked full-time throughout their careers. 

 

Analysis from provider Standard Life found people working three days a week for an extended period were up to £119,000 worse off by the time they reach retirement. In the UK, 23% of workers are in part-time work, many of them women and minority groups; a recent study by longevity thinktank Phoenix Insights found that 32% of women reduce their working hours for an extended period, thereby reducing their earnings potential and retirement pot. 

  

Standard Life gives the example of someone who began working full-time with a salary of £25,000 a year and paid the standard monthly auto-enrolment contributions from age 22, calculating that this worker could amass a total retirement fund of £434,000 at the age of 66. However, if the same person were to work three days a week from the age of 35, they would have a total pot of £315,000 at the age of 66. 

  

Temporary reductions are also impactful, as between the ages of 35 and 45 those working full-time would, under the same conditions, accumulate £44,400, while those working three or four days would accumulate £26,600 and £35,500 respectively. 

   

“Making the decision to switch from full-time work to part-time work is a significant one and is often triggered by life events like having a child. The decision has an obvious short-term impact on people’s take-home pay, but the longer-term consequences for their retirement plans are often overlooked,” said Neil Hugh, who heads up workplace proposition at Standard Life. 

 

“The reality is that women are more than three times as likely as men to work part-time, and it will often be women that have to think more carefully about whether they are on track for the retirement they want,” he added.  

 

At the Spring Budget, chancellor Jeremy Hunt said from September 2025 all working parents in England of children aged from 9 months can access 30 hours’ free childcare a week, to enable more parents to return to work amid high childcare costs. 

 

“However, having children is just one of many reasons for the gender disparity – others include women taking on more caring responsibilities for adults and cultural norms in some parts of society,” Hugh said. 

  

For now, he advised workers to max out their employer pension contributions if they can afford to do so, and for couples where one works part-time, that the other makes additional provisions for them. The latter is particularly relevant in the UK, where pension sharing on divorce is not mandatory. 

 

The latest Women and Retirement report by Scottish Widows found that 72% of part-time workers are women. With greater childcare responsibility and career breaks, and the resulting divergences in career trajectory and earning power, this means the average woman earns over £21,900 a year, while the average man earns nearly 50% more, over £30,900 a year, according to the provider.  

 

Separate research by master trust Now Pensions has found that single mothers are among those with the least pension wealth. This trend is worsening as single mothers’ pension wealth has almost halved between 2020 and 2022 and was at just £11,000 last year. 

Can the pension system ever be fair if occupational pensions remain coupled to paid work only?