We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

  • A A A
  • Top 5 tips to close the gender pension gap

    Chances are you’ve heard of the gender pay gap. However, you may be less familiar with its bigger sister - the gender pension gap.

    The reality for many women is, by 65, they’ll have saved just £69,000 into a pension. The average man would’ve accumulated £205,800 – a stark difference of £136,800.

    The bigger the pension pot, the more income you’ll have in retirement, and the more choice and freedom you’ll have to retire on your terms.

    If you take the full 25% tax free cash entitlement, with the remaining balance being used to buy an annuity – a guaranteed income for the rest of your life – here’s what you could expect.

    A female would receive just £3,396 a year, compared to that of a male who’d receive £10,237 a year – over three times the amount. This might get you thinking what you might be on track to receive when you retire – if you are, try our pension calculator.

    Thankfully, we aren’t alone in saving for life after work. The State Pension, due to rise to £10,600 a year from April, will go some way to providing for our needs. But with research from the Pensions and Lifetime Savings Association (PLSA) stating that a ‘moderate’ retirement living standard costs £23,300 for a single retiree, your personal pension needs to help bridge that gap. Currently, it’s safe to say a woman’s retirement looks significantly less rosy than a man’s.

    This article is not personal advice or a recommendation to invest. If you’re not sure if an investment is right for your circumstances, ask for financial advice. All investments can fall as well as rise in value, so you could get back less than you invest.

    What are the main drivers of this disparity?

    First and foremost there’s the gender pay gap (surprise surprise). Earning less directly, impacts how much women can save.

    Added to this are the career breaks, which can come in many shapes and sizes.

    In particular, it’s the unequal distribution of caring responsibilities that lands a double whammy, alongside the ‘motherhood penalty', there is also greater likelihood that women shoulder the responsibility of caring for elderly relatives later in life. These all result in women more commonly working part time. When women do go back to work, the menopause can also mean that one in four women consider leaving the workforce early.

    Both lower pay and less time spent in the workforce combine to make it harder for women to build up a decent pension pot. It also means that over the length of their career, they receive consistently lower pension contributions from employers.

    Despite these hurdles, it’s never too late to make a difference to your retirement outlook – your future self will thank you.

    What can women do?

    1. Start early and pay in as much as you can afford

    Time is your greatest ally. If you save more earlier on, your money has longer to grow. The magic of compounding means your money works harder, as you can potentially earn returns on your past returns. The longer your timescale ahead of retirement, the faster your money could grow.

    2. Wherever possible, keep up your pension contributions

    Missing or reduced contributions in your 20s and 30s can seriously lower your retirement income, so get ahead of the gap. Allow for that career break and plan for time taken out of the workforce. Whether it’s to have children, to travel the world or having to reschedule and reduce hours for medical reasons, like menopause.

    3. Maximise any employer contributions available

    Some employers offer an incentivised contribution structure, where they’re willing to pay more, provided you put more in too. This is essentially additional salary that you won’t otherwise receive, so it’s worth checking if they do.

    4. Increase your contributions with pay reviews

    A great discipline to get into is paying more into your pension every year with your pay review. For example, if you receive a 3% pay rise, consider placing at least an extra 1% into your pension.

    It’s surprising how quickly this will add up with very little impact on your day-to day spending habits. However, with life getting more expensive and budgets being squeezed, this should only be an option if you can afford to.

    5. Track down any lost pensions

    Changing jobs and moving home more frequently is resulting in people losing track of pensions. Finding a lost pension could make a considerable difference to your total pension wealth.

    Start by making a list of everywhere you’ve worked in your career and check to see if you have the pension paperwork for them all. If you’ve lost the details of a pension scheme, the first port of call is the government’s tracing service.

    Remember money in a pension can’t be accessed until you’re 55 – 57 from 2028. Tax rules can change and benefits depend on your circumstances.

    Join the Financially Fearless mailing list

    Financially Fearless is the first step in empowering women to improve their financial health and wealth. Take your first step today and sign up for weekly emails packed full of expert content using the form below. Or if you’re on Instagram follow us @FinanciallyFearless_hl.

    Please correct the following errors before you continue:

      Existing client? Please log in to your account to automatically fill in the details below.

      This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


      Your postcode ends:

      Not your postcode? Enter your full address.


      Hargreaves Lansdown PLC group companies will usually send you further information by post and/or email about our products and services. If you would prefer not to receive this, please do let us know. We will not sell or trade your personal data.

      Related articles

      How to boost your family’s financial resilience

      Expecting in 2024? Here are 5 tips to boost your family’s financial resilience.

      Clare Stinton

      5m read

      Kremi’s journey towards financial independence

      HL client Kremi shares how she navigates the complexities of investing for the future.

      Laura Burridge

      4m read

      Swipe left for debt: financial dating red flags

      We explore the common financial red flags you might find on a date, and how to overcome them.

      Sarah Coles

      7m read

      Women have the potential to become more financially resilient

      We explore why increased financial resilience can help us close the financial gender gaps.

      Susannah Streeter

      3m read