2025 marks the 50th anniversary of the Sex Discrimination Act, which made it illegal to discriminate against an individual on the grounds of their sex. While it did not bring about true equality, this landmark legislation gave women more rights in many areas, including their finances.
For example, women could open a bank account or take out a mortgage without a male guarantor for the first time.
However, despite the changes made by the Sex Discrimination Act and progress achieved in subsequent years, women still face significant financial barriers. This is especially true where retirement planning is concerned.
Women aged 45 face a £52,000 pension wealth gap
The gender pensions gap describes the disparity between the average retirement savings of women and men.
According to Pensions Age, 45-year-old women in the UK have an average of £48,000 in pension savings. In comparison, men of the same age have an average pot of £100,000.
As a result, women of this age face a £52,000 gender pension gap.
The findings also show that to make up this shortfall by retirement, women would need to earn more than double the salary of men between the ages of 45 and 68.
If you are unable to close the gender pensions gap, you may find it more difficult to generate an adequate retirement income. Indeed, the Trades Union Congress (TUC) reports that retired women in the UK have, on average, £7,600 a year less than men to fund their lifestyles.
Consequently, the gender pensions gap could make it more difficult to realise your dream retirement.
However, by understanding the reasons for a potential shortfall in your savings and taking crucial steps now, you can build adequate wealth to achieve your aims in later life.
The gender pay gap makes it more difficult for women to save for retirement
The gender pay gap is one of the key reasons why there is a disparity between retirement savings for men and women.
The latest figures from the Office for National Statistics (ONS) show that as of April 2025, average earnings for women were 6.9% lower than men.
If your earnings are lower, you are likely paying less than your male counterparts into your pension each month, especially if you have not voluntarily increased your contributions. This means your pension pot will not grow as quickly.
Women are more likely to take a career break to manage care responsibilities
It is equally important to recognise that women are far more likely to take a career break. This could affect your short-term earnings as well as the size of your pension pot.
The TUC reports that the latest data shows 1.5 million women aged between 16 and 65 are economically inactive (not in or seeking work) due to care responsibilities. This could be to care for children as well as support elderly relatives.
In comparison, there are only 290,000 men in the same situation.
Taking a break from work has a significant effect on earning potential, meaning it is more difficult to save for retirement. For instance, data from the ONS reveals that mothers typically earn 42% less per month five years after having their first child, based on figures collected between April 2014 and December 2022.
This means that you could be missing valuable pension contributions. Taking a break could also slow career progression, reducing earning potential in the future when you return to work.
3 ways to close the gender pensions gap
The combination of the gender pay gap and the disproportionate share of caring responsibilities women take on, means that you could face a gap in your retirement savings.
Here are three ways to make up the shortfall and achieve your desired retirement.
1. Review your pension contributions, especially before a career break
Since the introduction of auto-enrolment in 2012, employers have been legally obliged to enrol you in a pension scheme and start contributing, providing you meet certain age and earning requirements.
The legal minimum contribution is 8%, with at least 3% coming from your employer (there’s no specific employee minimum but you must make up any shortfall between your employer’s contribution and 8%).
However, this contribution might not be adequate to meet your retirement savings goal, particularly when you consider the gender pay gap.
We can help you review your current pension contributions and see whether you could afford to save a little more each month. The earlier you start increasing your contributions, the longer you will benefit from compound growth.
This means that even a small increase could make a significant difference to your pension pot, helping you close the gender pension gap.
If you plan to take a career break to raise children, care for elderly relatives, or pursue important ambitions in life, it may be especially useful to increase your contributions beforehand.
Consider how long you are likely to be out of work and which pension contributions you will miss. Then, if possible, increase your payments in the lead up to the career break to account for this.
It may also be beneficial to discuss the situation with your partner and see if they can afford to pay into your pension while you are out of work.
2. Claim all the tax relief you are entitled to
One of the key benefits of saving in a pension is that you receive tax relief on all contributions up to 100% of your earnings. You typically benefit from 20% tax relief automatically, meaning a £100 contribution “costs” you £80.
However, tax relief is based on your marginal rate of Income Tax. This means that, if you are a higher- or additional-rate taxpayer, you may be entitled to another 20% or 25%.
Crucially, you must claim this extra tax relief through self-assessment (or tax code adjustment for higher-rate relief) and many savers fail to do this. If you are not claiming all the tax relief you are entitled to, you could be missing a valuable opportunity to grow your pension pot.
With our guidance, you can understand exactly how much tax relief you are eligible for and make sure that you claim it all correctly.
3. Be proactive about managing your investment choices
Maximising the growth you achieve on your savings is another way to potentially close the gender pensions gap.
When you contribute to a workplace pension, the scheme provider will invest your savings in a default fund. However, most providers offer several different investment options. Some of these may provide higher growth than the default choice.
We can help you review your investment choices and consider your own attitude to risk and appetite for loss. Being proactive about how you invest your pension savings could help you grow your pot faster.
Get in touch
If you are concerned about the gender pensions gap limiting your retirement, we can support you.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This article is for general information only and does not constitute financial and legal advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pensions Regulator.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.