Women may need to work extra 19 years to bridge pension gap

Women may need to work, on average, an extra 19 years beyond the age men retire or contribute at a higher rate to bridge the current gender pension gap themselves, according to an independent research report.

In terms of pension contributions, women may need to contribute at a 6% higher rate than men (14% versus 8% respectively), says the report, by the Pensions Policy Institute (PPI). Published in February 2024, the report also reveals that by their late 50s, the pension money women accrue (known as 'pension wealth') is equivalent to less than two-third of men's. 

The effects aren’t limited to women’s financial security – there are wider societal and economic effects too, warns the report. For example, poor or unequal retirement outcomes can reduce quality of life and dignity in old age because women are often forced to depend on family or state aid. This ‘can lead to feelings of dependence and loss of autonomy, as well as the potential health impacts of poverty’, says the PPI.

While the gender pension gap is a big cause of rising poverty rates among the elderly, women are particularly at risk. Around two-thirds (67%) of retirees in poverty are women, according to the PPI. And half of the retirees in poverty are single women.  

It’s hard to predict when – or even if – this gap will ‘ever be fully closed’, says the report, because it's likely to require major shifts in society – from employment rights to societal attitudes and expectations. This includes gendered divisions of domestic labour in the home.

Separate research carried out here at Just in May 2024, based on the views of 1,505 people with private sector DB pensions, reveals that many more women than men also lack confidence about planning retirement. Among those surveyed, 65% of women versus 35% of men aren’t confident about their retirement planning.   

Women are, however, more likely than men to be part of a defined benefit (DB) pension scheme, says the PPI, boosting the average women’s pension wealth by around 10%. This is primarily because there are more women working in the public sector, where DB schemes are more common.