New research has found that 73% of women are only making minimum pension contributions, compared with 58% of men. It also shows that the proportion of women making occasional lump sum payments (5%) is half that of men. Is enough being done to address the looming retirement crisis for women? 

  

While the majority of both women and men pay in only the minimum – at auto-enrolment levels this is widely considered insufficient for an adequate retirement outcome – the proportion is much higher still among women at nearly three-quarters. The current minimum auto-enrolment pension contribution is set by government at 5% of employees’ salary, topped up by 3% worth of salary contributed by the employer, while some employers set their own minimum levels in order to attract a certain level of employer contribution. 

 

The survey, commissioned by Standard Life, also shows just 17% of women regularly contribute more than the minimum to their pension, compared with a quarter (25%) of men. One in ten (10%) men make occasional extra lump sum contributions, but this falls to only 5% of women. 

 

“The disparity in contribution levels between women and men is leading to financial inequality in retirement. Women are more likely to pay the minimum into their pension and so more likely to find themselves financially disadvantaged in retirement than those who have topped up their contribution levels or paid in one-off lump,” said Neil Hugh, head of workplace proposition at Standard Life.  

 

Auto-enrolment's current minimum contribution levels are not high enough for savers to achieve a comfortable retirement, he added. “While we hope this changes in the future, for now we have a significant undersaving problem.”  

 

The figures suggest that women will be particularly affected in retirement, especially as pension sharing on divorce remains voluntary in the UK. 

 

“Despite shifts in culture and attitudes over recent decades, women still shoulder more than their fair share of caring responsibility for vulnerable adults, like elderly parents, as well as their children. Hopefully the expansion of the government’s free childcare offering announced at the Spring Budget will start the long journey to improving the situation for women – but to accelerate progress, expansion of the auto-enrolment scheme is badly needed,” Hugh said. 

  

Trade union Prospect estimates that the gender pension gap in the UK in 2019-20 was 37.9%. This is down to several interlinked structural factors working to economically disadvantage women, such as the gender pay gap. Women are also 32% more likely to reduce their working days for an extended period of time, typically to care for children or relatives, according to think tank Phoenix Insights, impacting their earnings and career prospects. Auto-enrolment design compounds these factors through imposing earnings thresholds, with women (35%) much more likely than men (11%) to fall below these. 

 

The survey was conducted among 6,000 UK adults between 6 September and 16 October 2022. 

  

As many employers and UK policies still work on the premise of a breadwinner family model, should pension sharing become mandatory? What other options are there to improve women’s retirement outcomes?