FEMALE IFAs have warned that the gender pension gap is set to get worse in the years ahead as stubborn above-target inflation and the cost of living crisis are impacting women’s ability to save for their futures.
A growing financial squeeze, they say, is exacerbating the underlying structural and behavioural causes of the gender pension gap.
According to the latest official estimate from the Department for Work & Pensions (DWP), which analysed data between 2020 and 2022, the gender pension gap is 48%.
The DWP found that among adults aged 55–59, women’s median private pension wealth was £81,000, just over half the £156,000 held by men in the same age group.
Separate data published by the Office for National Statistics earlier this year showed that, in the private sector, 76% of female employees had a workplace pension in 2024 compared with 81% of male employees.
In the public sector, by contrast, 90% of male employees and 90% of female employees had a workplace pension.
Cost of living crisis
Rebecca Robertson, Independent Financial Adviser and Director at Evolution Financial Planning, said: “Though the gender pension gap is structural as well as financial, there’s no doubt that the ongoing cost of living crisis is damaging women’s ability to save for their futures.
“Rising everyday costs and above-target inflation are eroding women’s future retirement incomes and this has the potential to become a real problem further down the line.
“Yes, women working full-time in high income roles, with no gaps to employment, usually in large corporate jobs or local government, aren’t feeling the impact as much.
“But those women working in other paid roles or part-time, the nurses and teachers, are now paying less into their pensions because their money simply doesn’t go as far.
“Within two income families, where the female’s income, as it often does, is covering lifestyle spending such as holidays and kids’ hobbies, rising costs mean the likelihood of them prioritising their pensions is unlikely. This is an unknown danger that many women are walking into.”
Behavioural problem
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, added: “One of the biggest misconceptions in retirement planning is that the gender pension gap is purely an investment problem. In reality, much of it is behavioural and structural.
“Women are often more financially cautious, more likely to prioritise family stability over their own long term provision, and more likely to pause or reduce work during key earning years.
“While those decisions may make sense emotionally at the time, the long-term compounding impact on pensions can be enormous.
“I do think the gap risks worsening for certain groups, particularly divorced women approaching retirement with fragmented pension histories, and insufficient understanding of what their retirement income will realistically look like.
“I am also seeing more women prioritising children financially at the expense of their own future security. The solution is not simply telling women to invest more. Planning needs to become more relatable, practical and focused on real life stages rather than products.”
Punished by the system
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, is also worried the gender pension gap will get worse before it gets better, primarily due to structural reasons.
She said: “Women are still more likely to take career breaks, reduce hours for childcare or caring responsibilities, earn less over their lifetime and live longer, which means pensions have to stretch further.
“The issue is not that women are bad at retirement planning, rather that the system often punishes the life patterns women are more likely to have. Auto-enrolment helped, but minimum contributions will not close the gap on their own.
“We need pension education earlier, proper conversations around maternity leave and part-time work, more awareness of pension sharing during divorce, and employers helping women understand the long-term cost of contribution gaps.
“Partners also need to stop seeing pensions as “his and hers” when family decisions affect both futures. The gap will only improve when pensions are discussed as part of real life, not just payslips and projections.”
Gender pension gap
Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, described the gender pension gap as “a structural income issue”, which creates crucial compounding issues.
She continued: “Women with great careers still fall behind by pausing work for children or reducing hours. Losing pension momentum in their 30s and 40s, when compounding matters most, leaves many shocked by the gap in their 50s.
“There’s also a huge emotional layer that doesn’t get discussed enough. Women often underestimate how much they’ll need later in life, despite statistically living longer.
“The pension gap won’t close through awareness campaigns alone. We need better parental leave structures, pension contributions during caregiving years, and earlier wealth-building conversations for women.
“The women whose pension pots will ultimately be big enough are usually the ones who understand that whilst time and compounding matter, the amount going in matters, too.”
