At retirement women’s pensions savings are 55 per cent less than men’s according to new data highlighting the ongoing gender pension gap.
The data shows that by the time a woman reaches the state pension age of 67 she will have on average savings of £105,000, whereas the average man will have a savings pot of £232,000 at the same age.
These gender gap persists among older age groups: at the ages of 70 to 74 women have savings that are 50 per cent less than men, rising to a 74 per cent gap between women and men aged 75+.
Mercer has published these figures, based on insights from the forthcoming report on the Gender Pensions Gap published by Now: Pensions (which it acquired in 2024) and the Pensions Policy Institute (PPI).
The data shows that auto-enrolment has led to more women saving into pensions and has marginally reduced this pension gap, but significant savings gaps still exist. This is due to the fact women typically work for fewer years, due to caring responsibilities, are more likely to be in part-time employment and have, throughout their careers, lower average wages.
This issue is being exacerbated by the AE ‘trigger’ which only automatically enrols people into pensions once their earnings exceed £10,000 a year. Women are more likely to work part-time. But the data shows that 79 per cent of women working part-time earn below this trigger, compared to 9 per cent of part-time male employees. Some of these women will have more than one part-time employment so total earnings may be over £10,000 but no AE payments will be taken if each job is below this level.
To address this imbalance, Mercer and Now: Pensions are calling for a “robust discussion” on the removal of the £10,000 AE earnings trigger and the lower earnings limit.
Taken together, these measures could bring 726,000 more women into AE, with up to £218m of annual contributions, according to the PPI. However the PPI says measures need to be considered alongside the potential impact on lower earners, as well as considering the timing and sequencing of any such change.
The report says that if these measures had been in place at the start of automatic enrolment in 2012, women would have achieved an additional £7.7bn pounds in pension savings.
Patrick Luthi, CEO of Now: Pensions and head of DC product at Mercer says: “We acknowledge there has been some progress in addressing the gender pension gap.
“However, women in the UK still face significant barriers to build adequate pension savings, which can lead to poor retirement outcomes. We continue to call for a review of the auto-enrolment earnings trigger and the lower earnings limit. Removing these could go some way to addressing this historic imbalance by helping women to build a financially secure future – but the wider impacts on affordability need to be explored.”
Joanne Segars OBE, chair of the trustee board of the Now: Pensions Master Trust adds:“We are committed to pushing for changes to make the UK’s pensions system more inclusive and equitable. We’re proud to continue raising awareness of the savings gap, which is hiding in plain sight. We have long called for urgent policy action to help reduce the huge gender pensions gap we see today. Without further changes, millions will continue to struggle to achieve a secure retirement.”
