Women approaching retirement have median pension wealth equivalent to 54% of that held by men of the same age, according to new research from the Pensions Policy Institute (PPI).
The PPI found gendered working patterns have the biggest impact on the divide, reducing the median pension wealth of women aged 55 to 59 by 39% relative to men.
The gender pay gap accounts for a further 19% reduction, highlighting the long-term effect of lower earnings and different employment patterns on retirement savings.
However, the research found one significant offsetting factor. A higher proportion of women work in the public sector, where access to more generous pension provision increases their pension wealth by 12% relative to men of the same age.
John Adams, senior policy analyst at the PPI and author of the report, said: “The gender pension gap has become a severe inequality within the pensions landscape, with women remaining at significant risk of falling into pensioner poverty.”
The report also points to the wider consequences of the gap. Women account for 57% of pensioners living in poverty, according to figures cited by the PPI, raising concerns over the pressure inadequate retirement incomes can place on both individuals and the welfare system.
The findings are based on analysis of the Wealth and Assets Survey, using interviews conducted between 2020 and 2022, and compare men and women with some pension wealth.
The research comes as the Pensions Commission considers the adequacy, fairness and sustainability of the UK pensions system and prepares recommendations for government.
Lizzy Holliday, director of government relations at Marsh, which sponsored the report, said: “These findings highlight the scale of the gender pension gap and the financial inequality women still face as they near retirement.
“Having around half the pension wealth of men at the same age reflects inequalities that build up throughout women’s working lives. As policymakers and the pensions commission consider the future of the UK pensions system, closing the gender pension gap must be central to that conversation.”
The report updates PPI analysis first carried out in 2019 and revisited in 2023.
Sarah Coles, head of personal finance at AJ Bell, said the report made for “stark reading”.
“Women are significantly more likely to work part-time for a period than men,” Coles said. “In many cases, this comes as a result of having children and taking on caring responsibilities…
“When women cut back their hours, their pensions take a hit. Some will be contributing a percentage of a much smaller wage, whereas others will feel they can’t afford to make contributions at all.”
This savings impact is compounded by the gender pay gap, Coles continued, which widens as people age.
“The gender pension gap can’t be considered in isolation, because so many people will retire as part of a couple, and in many cases it’s a partner of the opposite sex,” she explained. “However, being so reliant on a partner runs the risk of divorce, separation or bereavement pushing some women into difficulties later in life. It also means single people can struggle, especially if they are divorced or never married.”