The government-backed Pensions Commission is set to urge ministers to take action to close the gap in retirement savings between men and women. According to the commission, women approaching retirement have on average half the private pension savings of men, with a median pension wealth of £81,000 compared to £156,000 for men.
Interim Report Expected This Week
The commission, revived under Keir Starmer's government, is expected to publish its interim report on the long-term future of the retirement system this week. It will examine how the government can reduce the gender pension gap as part of its work towards a final report with recommendations, expected next year. The commission stated that closing the gender gap in private retirement wealth is "not only a matter of fairness" but also essential to prevent a rise in pensioner poverty and protect government finances.
Motherhood Penalty Identified
The interim report draws on data from the Institute for Fiscal Studies, which highlights a "motherhood penalty" that causes women's pension contributions to flatline after childbirth. The IFS found that women contributed about £30 a week on average to a pension before having their first child, a level that remained unchanged six years later. In contrast, men's savings rates grew from about £30 a week to more than £60 a week over the same period.
Women are also more likely to work part-time or leave work entirely due to caring responsibilities, which excludes them from automatic enrolment in workplace pension schemes. The commission noted that the UK has the second-worst gender pensions gap among rich countries in the OECD, behind only Japan, despite near-equal state pension outcomes for men and women reaching retirement age in 2026.
Call for Joined-Up Approach
The commission said solutions will require a "joined-up approach" involving reforms to pensions policy and the labour market, including access to childcare. Lady Drake, chair of the commission, stated: "The evidence is clear. Women are approaching retirement with half the pension wealth of men, and without further action, this difference will persist. The gender pensions gap is not simply a reflection of the pay gap, it is shaped by a system that has not yet fully accounted for the realities of many women's working lives, including career breaks for caring, part-time work, and the motherhood penalty we have identified."
The commission, led by Jeannie Drake alongside Ian Cheshire and Nick Pearce, will look at pension policy measures that can help reduce the gap, emphasizing the need for collaboration among employers, pension providers, and policymakers.
