The Gender Retirement Gap: Why It Persists and How to Close It

A recent report from FT Adviser highlights that the gender retirement gap stubbornly refuses to close, driven by a complex mix of structural inequalities and behavioural barriers. For many women, the reality of retirement is significantly less comfortable than it is for their male counterparts.

This isn't just about earning less during working years. It's about how those lower earnings, combined with career breaks and different approaches to risk, compound over decades to create a substantial shortfall in pension pots.

The Compounding Effect of Career Breaks

One of the primary drivers of the retirement gap is the disproportionate impact of caregiving on women's careers. Whether taking time out to raise children or care for elderly relatives, these career breaks mean years of missed pension contributions. Even when returning to work, many women do so part-time — further reducing their ability to build a substantial retirement fund.

The compounding nature of investments means that missing contributions in your 30s and 40s has a massive impact on your final pension pot in your 60s. According to The Money Charity, while 55% of working-age adults actively participated in a pension in 2023–24, the structural disadvantages faced by women mean their average pot size is often significantly smaller.

The Risk Tolerance Divide

Beyond structural issues, behavioural factors also play a crucial role. Studies consistently show that women tend to be more risk-averse than men when it comes to investing. While a cautious approach can protect against short-term market volatility, it can be detrimental over the long term.

Pensions are inherently long-term investments, often spanning 30 to 40 years. Over such periods, investing in higher-growth assets like equities is generally necessary to outpace inflation and build a sufficient retirement fund. By opting for lower-risk, lower-return options, many women inadvertently limit the growth potential of their pensions — widening the gap further.

"Missing pension contributions in your 30s and 40s due to caregiving breaks has a massive compounding impact on your final pot in your 60s."

Taking Control of Your Retirement

Closing the gender retirement gap requires both systemic changes and individual action. While we wait for policy shifts, there are steps you can take today:

• Understand your current position. Do you know how much is in your pension pot? Have you checked your State Pension forecast? Knowledge is the first step.
• Maximise employer contributions. Ensure you're contributing enough to get the maximum employer match. It's essentially free money.
• Consider voluntary contributions. If you've taken a career break, look into whether you can make voluntary National Insurance contributions to fill gaps in your record, or consider setting up a SIPP to supplement your workplace scheme.

Think clearly. Break through the jargon.

References

1. FT Adviser. "Why the gender retirement gap still won't close"
2. The Money Charity. "The Money Statistics March 2026"