The government-backed Pensions Commission has issued a stark warning: women approaching retirement have on average half the private pension savings of men, resulting in a £75,000 shortfall. The Commission is urging immediate action to address this disparity.
Key Findings on the Gender Pensions Gap
According to the Commission, women have a median pension wealth of £81,000 compared to £156,000 for men. Lady Drake, a leading figure on the Commission, stated: “The evidence is clear. Women are approaching retirement with half the pension wealth of men, and without further action, this difference will persist.”
She emphasized that the gap is not merely a reflection of the pay gap but is shaped by a system that does not fully account for the realities of many women’s working lives, including career breaks for caring, part-time work, and the motherhood penalty.
Analysis from the Women's Budget Group
Analysis of the Wealth and Asset Survey 2020–2022 by the Women's Budget Group reveals that, on average, men hold around £155,000 in private pension wealth, while women have nearly £88,000. Furthermore, women are more likely to have no private pension wealth at all—among those with zero private pension wealth, 58% are women.
Urgent Recommendations for Government
The Commission has called for several key actions:
- Urgently examine the interactions between pension needs and other areas of social security, including Pension Credit, Universal Credit, and Housing Benefit.
- Address the regressive nature of pension tax reliefs and explore alternative uses of these funds to reduce pension inequality.
- Introduce mechanisms to recognize unpaid care work in pension entitlements, such as carer credits within private schemes.
- Ensure that sufficient state pension continues to be paid and is not dependent on means-tested top-ups based on couples’ incomes.
Government Response
Labour Party Work and Pensions Secretary Liz Kendall said: “People deserve to know that they will have a decent income in retirement – with all the security, dignity and freedom that brings. But the truth is, that is not the reality facing many people, especially if you’re low paid, or self-employed.”
She added: “The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place.”
The Commission is expected to propose further solutions in the coming months, with a focus on collaborative efforts among employers, pension providers, and policymakers to reduce the gender pensions gap.
