The launch of official gender pensions gap statistics shows that across age groups and scheme types, the gender pensions gap is at 35%, and at 32% for those eligible to be auto-enrolled.

 

The Department for Work and Pensions has for the first time measured and published figures on the gender pensions gap using data by the Office for National Statistics. This shows the gender pensions gap is currently at 35%, down from 40% in 2016-18, and at 32% if looking only at those eligible for auto-enrolment.  

However, the statistics also raise the question if the shift from defined benefit to defined contribution is currently exacerbating the gap. Among those around normal minimum pensions age, it is largest for people who only rely on DC for retirement, standing at 60% in 2018-20. The DWP has been asked to comment on this figure.

 

Pensions minister Laura Trott said the success of auto-enrolment has transformed the UK pensions landscape and brought millions of women into pension saving.  

 

“However, while the participation gap has closed, the wealth gap persists,” she said. 

  

“The publication of an official annual measure will help us track the collective efforts of government, industry and employers to close the gender pensions gap and ensure women can look forward to the retirements they’ve worked so hard for,” Trott added. 

 

The minister, appointed last November, has been more conciliatory about addressing the UK’s large gender pensions gap than some of her predecessors. Responding to a Work and Pensions Committee inquiry, the DWP announced in January that it would develop a metric for measuring progress on reducing the gender pensions gap, which would also provide the evidence base for a policy response.  

   

    

Giving evidence to the committee, union Prospect had been calling for a recognised official measure and annual parliamentary debate on the issue, as well as making it an equality objective for the DWP.  

 

     

The gap reduced from 2006-08 to 2010-12 because women’s private pension wealth at NMPA increased at a higher rate compared to men's pension wealth.  

 

It doubled between 2014-16 and 2016-18, as many more women than men were among the low-earning savers brought in by auto-enrolment, pushing down the female median.  

 

The DWP states that women’s pensions wealth has increased in real terms since 2006-08, when it stood at £50,000 at age 50-54, while in 2018-20 it was £94,000 for women aged 55-59 – the age difference is due to the increase in minimum retirement age, which could also explain some of the real terms increase. Men’s median pension wealth went up from £85,000 to £145,000 at those ages. 

 

The size of the gender pensions gap varies by age band. Similar to the pay gap, it is smallest for those aged 35-39 (10%) and goes up to 47% for those aged 45-49, decreasing again somewhat in the later years of people’s working lives. 

  

In the public sector, men saved £8,480 compared with £6,320 for women, while in the private sector, men contributed £2,010 compared with £1,500 for women. The total contribution gap for all female employees compared to all male employees is 17%, with the total annual contribution into workplace pensions in 2021 at £52bn for female employees and £62.6bn male workers. 

 

The Pensions Regulator welcomed the publication of the new gender pensions gap metric. Louise Davey, interim director of policy, analysis and advice, saying TPR is committed to working with industry and government to understand saver inequalities and create a workplace pension system that works for everyone.  

 

“The successful roll-out of auto enrolment has had a huge impact on the savings landscape, driving up the number of people saving up for their retirement, including many women for the first time. In our role as regulator, we will continue to use our compliance and enforcement powers to protect savers and ensure all eligible workers get the pension they are entitled to,” she added. 

 

Welcoming the initiative, head of pensions at provider Aegon, Kate Smith, noted that while it is widely recognised that there is a persistent gender pensions gap, until now there has been no official means of measuring this.  

 

“It’s just not acceptable that the gap sits at 35%, meaning many women are lagging far behind their male counterparts when it comes to retirement provision,” she said. 

  

“Regularly measuring the gender pensions gap should help to inform the impact of future pensions policy, such as the improvements to auto-enrolment and wider public policy such as the recently announced expanded free childcare for all under-fives,” Smith added. 

 

Gail Izat, workplace managing director at provider Standard Life, said: “The gender pension gap is still way too high – we simply shouldn’t still be seeing such a huge discrepancy between men and women’s retirement savings as we move towards the mid 2020s.”. 

 

Izat highlighted the gender pay gap and the fact that women are more than three times as likely as men to work part-time, often as a result of taking on the majority of caring responsibilities within a family, as some key contributing factors. 

 

“These issues might be beyond the scope of the pensions world, but there are structural changes that could be made within the UK pensions model to help close the gap,” she remarked, mentioning the lower earnings threshold as a hurdle that should be removed.  

 

“Hopefully the bill moving through parliament to legislate for this passes and is swiftly implemented,” she said. 

 

What else could be changed within the pensions system to reduce the gender pensions gap?

Kate Smith