The Government is facing mounting pressure for reform as women approaching retirement age have just half the private pension wealth of men, sparking fresh demands for an overhaul to address what campaigners describe as a 'motherhood penalty'.
A stark warning from the Pensions Commission reveals that women nearing later life have median pension savings of £81,000, compared with £156,000 for men. The government-backed body is now pressing ministers to take action, cautioning that failure to bridge the gap risks deepening pensioner poverty and placing further strain on public finances.
The commission stated that addressing the gender divide would be central to its work on the long-term future of Britain's retirement system. It warned that the imbalance is 'not only a matter of fairness' but could leave countless women financially vulnerable in old age.
'Motherhood penalty' hits savings
Analysis supporting the report highlights a clear trend: women's pension contributions plateau after having children. Research by the Institute for Fiscal Studies found women typically put around £30 a week into pensions before their first child – a figure that remains static even six years on. Men's contributions, by contrast, climb sharply over the same period, doubling from approximately £30 a week to in excess of £60.
This growing divide is made worse by the reality that women are significantly more likely to work part-time or leave employment altogether due to caring duties – frequently losing out on automatic enrolment into workplace pension schemes.
UK among poorest performers
The commission cautioned that Britain has one of the widest gender pension gaps in the developed world – ranking second worst amongst OECD nations, behind Japan. This persists despite men and women now receiving broadly comparable state pension outcomes at retirement age.
Lady Jeannie Drake, who chairs the commission, told the Guardian: '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.'
Demands for 'joined-up' reforms
The commission stated that tackling the issue will require a 'joined-up approach' – combining pension reforms with broader changes to the labour market, including improved access to childcare. It is anticipated to examine potential policy solutions ahead of a complete set of recommendations next year.
The body itself was originally established under Tony Blair in 2002 and revived last year by Sir Keir Starmer amid concerns that today's workers could be poorer in retirement than current pensioners.
