We’ve all heard about the gender pay gap. If you’re a woman, you could be on a lower salary than male co-workers. In fact, the gender pay gap was 15.4% as of 2021 – and older women are hit much harder than their younger counter-parts.

Sadly, that unfair difference doesn’t end with retirement. There’s a gender pension gap too, continuing the divide between men and women, and we reflect on this savings gap in the article to follow.

What’s the gender pension gap?

The gender pension gap is the percentage difference in income between men’s and women’s pensions. It begins at the very start of a woman’s career, with an initial pension gap of 17%, and at every age bracket women are shown to have lower pension pot sizes. By the time they reach retirement, the average size of a man’s pension pot is twice that of a woman’s.



How do men’s and women’s pension savings compare?

Generally, the average UK pension pot for men and women over 50 holds:

  • £82,311 for men
  • £43,014 for women

That means that men aged over 50 have nearly twice as much saved in their pension pots as women, setting themselves up for a much more comfortable retirement. In contrast, a quarter of women over 50 have less than £5,000 in their pension pot, and are more likely to not know the size of their pension pot at all.

Why does the gender pension gap exist?   

Our recent research shows that the difference in pension pot sizes between men and women begins right at the start of their careers. This initial gap in pension savings starts at 17%, but can double by the time women reach their 40s.

By the time they’re in their fifties it could be 51% and finally when they reach retirement their pension savings could be 56% smaller on average. Of the 37,000 people we spoke to who retired in 2020, the average men’s pension pot at retirement was £21,000, compared to £10,000 for a woman – a difference of more than half.

Andrew Kail, CEO of Legal & General Retail Retirement says: 

"Our data demonstrates a significant difference between the pension wealth of men and women and raises further concerns about women’s finances at the point they reach retirement. We know there are a multitude of factors that influence these figures, from the gender pay gap to the increased likelihood of women working part-time or taking career breaks when compared to their male colleagues.

We also know that the pandemic has likely increased this disparity due to the unpaid caring responsibilities that typically fall to women. We need to do more to address this financial inequality but also to address the root causes that influence it, specifically the significant burdens our society places on women outside of their careers."

Divorce is another factor that affects men’s and women’s pension pots differently, and increases the overall savings gap. Separation can have a huge impact on pension and retirement income, but only 3% of people seek financial advice as part of their divorce.

Women are more likely to waive rights to a partner’s pension as part of a divorce, despite entitlement to a portion of their husband’s private pension wealth, and are likely to see their annual income fall by almost twice as much as men following the separation. With one in four divorces occurring after the age of 50, considering the impact on retirement is really important.

Why is private pension wealth so important, especially when it comes to women’s pensions?

According to our recent research, £25,000 a year is the average income target for retirement for people over 50 and still working. For many people, their income will be from a combination of a private pension, state pension, savings and other income sources. The basic State Pension is £7,155.20 a year, leaving many short of the retirement lifestyle they plan to enjoy in later life. To learn more about saving for a financially secure retirement, read our article on saving for retirement in 2021 and beyond.

What can you do about the gender pension gap?

The gender pension gap is a challenge for our whole society. But there are steps that you personally can take to push back against it. We have some tools to help you be better informed:

  • Use our Retirement Income Calculator to see how much money you’ll get when you retire, and make sure you’re saving the right amount ahead of that
  • Take our Open University course for a deeper dive into pensions – it’ll help you understand more about them and plan for the retirement that’s right for you

Pushing back against the gender pension gap will help you safeguard your future and fully enjoy your retirement. Our Rewirement Podcast will show you how some amazing women (and some men too) are making the most of their retirement. With the right steps, the savings gap doesn’t need to be a reality.