International Women’s Day: closing the savings and pension gender gap

Today is International Women's Day and the theme for 2024 is ‘inspire inclusion’. To help inspire inclusion and forge women's economic empowerment, we are delving into the subject of the gender savings and pension gap. 

In January 2021, the UK Adult Financial Wellbeing Survey, conducted for MaPS by Critical Research, found that women are faring less well than men on almost all key financial wellbeing measures. It’s important to note that the key drivers for lower levels of financial wellbeing among women are interconnected with the structural gender inequalities that exist in wider society.

With this in mind, it’s clear that this topic is too big for a single blog post to tackle. However, we will discuss some of the areas that employers can consider to help address these issues.  

MaPS research (1) shows us that in the UK, women and men have similar age and ethnicity profiles. However, differences start to emerge when we look at factors such as employment and income, financial resilience, and overall financial wellbeing. 

We know that women are less likely to save on a regular basis than men. The UK Adult Financial Wellbeing Survey shows that just over half (54%) of women report being able to save every/most months. This is significantly lower than the figure for men, which is closer to three in five (59%). The survey also found that women are less likely to have a plan for their money in retirement (60% of women compared to 44% of men) and are less likely to say they understand enough about pensions to be able to make effective decisions about saving for retirement (41% of women compared to 57% of men).

There are many reasons why these gaps exist. This can include:

• A much smaller proportion of women are working in full-time employment (35% in comparison to 54% of men). The gap is even bigger when we consider single parents, as there are 38% of women in full-time employment compared to 78% of men. 
• Women make up 72% of the part-time workforce and tend to have gaps in their working lives (2).

• On average, women earn much less than men. There are significantly more women on lower personal incomes of up to £17.5k (62% compared to 42% men). When we look at income bands, there are double the proportion of men on incomes over £35,000 compared to women (25% compared to 11%). 

• Women are less confident when it comes to managing their money, which is especially true for younger women. It’s also reported that many women have seen their savings fall since the start of the pandemic - more women now have less than £1,000 in personal savings. 
• Women also tend to be the main caregiver, both for children and elderly parents. This can accumulate a significant gap in pension contributions and savings. 

• There are socio-economic differences between men and women. Women tend to live longer than men and will therefore require more money in retirement. By the time a woman reaches state pension age (currently 67), they will have average pension savings of £69,000. This is £136,000 less than the average man, who will have saved £205,000 (3). 
• The design of pension systems could be another contributing factor. Typically, women have been more likely to work part-time, earn lower salaries or work multiple jobs. This has meant they’re more likely to miss out on automatic enrolment into a workplace pension by falling below the minimum income threshold. Forthcoming reforms to automatic enrolment will remove the lower earnings threshold for automatic enrolment and lower the age of entry to 18. These changes could help to boost the savings of lower earners or people with second jobs. 
• In a Money Helper blog, award winning personal finance journalist, Faith Archer, notes that there’s a generation of women where the whole pension set up was based on married couples. The wife was expected to benefit from her husband’s pension pot, which left women with inadequate pension provision and did not consider what would happen in the event of a divorce. 

• The gender pay gap, which shows the difference in average earnings between women and men, usually shows that men earn more than women. Closing the gender pay gap is essential in narrowing the pension divide.  

• Consider flexible working arrangements, such as remote working, flexible hours or job-sharing opportunities. These working arrangements can help to dismantle barriers and enable women to balance work and caregiving responsibilities.    

• Education and training opportunities can equip women with the skills and knowledge they need to make informed decisions when it comes to their retirement planning, savings, and pension options. The delivery of this training can be specifically tailored to the needs of women, such as exploring what will happen if a woman leaves her job to start a family. 
• It’s also important to provide information that will highlight the difference that individual choices can have on your pension, take-home pay, and overall financial wellbeing.  
  

• Salary sacrifice for pension contributions means that employees agree to give up a part of their earnings. This reduces their overall salaries, but in return the employer agrees to pay these 'sacrificed' earnings directly into employee's workplace pensions. This results in pension contributions being maintained at pre-maternity levels throughout paid maternity leave. 

• We’ve already established that women are more likely to have gaps in their working lives and make up 72% of the part-time workforce. Building a family-friendly culture (such as enhanced parental leave and additional childcare provision) that helps employees balance their work and home life, can empower women to fulfil their potential at work. Supporting policies should also allow the opportunity for women to progress their career. 

MaPS offer a range of free and impartial expertise, support and resources that could help employers, such as: 

• A quick start guide for employees to make the most of their money. 
• Ways to help employees build up their pension. 
• Payroll-deducted saving schemes. 

Our local partnerships team can also offer free support and practical ways to help you build financial wellbeing across your organisation.

Our consumer-facing service, MoneyHelper, provides free and impartial money and pensions guidance for people across the UK. There’s a wide range of information and resources available to help you support your workforce, including:  

• Pensions basics. 
• Pension calculator. 
• State Pension. 
• Types of Savings.  
• Savings calculator.  

1. Money and Pensions Service (2021) Cross-cutting themes of the UK Strategy for Financial Wellbeing: gender, mental health and ethnicity.
2. Scottish Widows (2022) Women and retirement report. 
3. Now: Pensions (2024) Gender pensions gap report.