A new report for the government has concluded that auto-enrolment falls short when it comes to closing the gender pensions gap. The findings are being used to inform the work of the Pensions Commission, which will publish a problem statement shortly. 

The report published on Monday, ‘Life courses and pension saving patterns’, analyses the relation between labour market histories and pension saving in the UK, resulting in markedly worse outcomes for people taking on caring responsibilities. 

People with “long spells of non-employment or self-employment", and to some extent those mostly in part-time work are at risk of building up little or no pension wealth under the UK’s private pension system, which is most common among women, especially those from ethnic minorities, the report found. Other affected groups include those who report being disabled in their later working life. 

The Department for Work and Pensions study said auto-enrolment has addressed some of the differences in pension participation but added: “As long as significant differences in labour market patterns exist, automatic enrolment policies on their own cannot eliminate the differences in pension saving between groups.” 

The DWP report states that average retirement incomes for groups with lower labour market attachment and private pension savings “are higher once partners’ incomes are included” but points out that marriages and partnerships can and will end – whether through separation or bereavement – exposing mainly women to lower incomes in later life. 

The department  said ‘life events’, for example having a child, relationship breakdown or changing housing tenure, “tend to have a limited effect on pension participation or changes in contribution rates for people who remain private sector employees” but can still impact the amount people save in private pensions. 

“Most notably, private pension saving of men and women diverge after the birth of a first child, almost entirely due to changing working patterns and earnings rather than due to pension contributions conditional on labour market behaviour,” the report found.  

For people aged 55-59, this meant the gender pensions gap in 2020 to 2022 was a shocking 48% – with women having median pension wealth of £81,000, compared to £156,000 for men, government figures suggest. 

“It is encouraging that the Pensions Commission looks set to focus on how government can reduce the gender pension gap as part of its wider review into the future of the retirement system,” said Kelly Parsons, head of DC proposition at consultancy Broadstone. “This demonstrates why pension policy cannot be separated from wider labour market inequalities. Without further action to support carers, lower earners and people with non-linear careers, there is a real danger that today’s working patterns continue to translate into entrenched financial inequalities in retirement.” 

In the Local Government Pension Scheme, efforts are being made to improve outcomes for women. Since April, unpaid parental leave in the LGPS is pensionable, with the cost carried by the employer. The government is also introducing gender pension gap reporting.  

Unison recently welcomed the LGPS changes, but warned about Reform UK’s agenda of rolling back equality. National secretary for equalities, Gloria Mills warned: “We are concerned about Reform UK’s hostility to flexible working and the ability to work from home. Such attitudes could further disadvantage women in regard to employment participation, and beyond that, to entitlement to a decent retirement income.  We will hold Reform to account.” 

The party, which won the most seats at the recent local elections, said it would close the LGPS to new entrants from 2030 and turn it into a sovereign wealth fund.