Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

Why do women have less pension savings than men?

It is common for women to have much smaller pension pots than men. Increased life expectancy is a challenge for both men and women. Many pensions can now be accessed from age 55 (rising to 57 in 2028). However, the state pension doesn’t start until the age of 68 meaning that private pensions have to be of significant value in order to provide the full income until the state pension begins. The state pension is only up to £185.15 per week (in the 2022/23 tax year) so it is likely that a private pension will still be needed alongside this to supplement income.

Why do women face more challenges than men when saving for retirement?

Women’s life expectancy is higher than men’s with the average age of women being almost 83 and men being 79*. This means that their pension pot needs to last longer than men’s.

Part of the pension inequality is driven by women often having lower paid roles or working part-time due to the majority of childcare or family care responsibilities falling onto women not men. Women often look to return to work after having children on a more flexible arrangement or they choose part time hours. If their part-time salary is under £10,000 per year then they will not automatically qualify for an auto-enrolment pension which is where the employer has to opt the employee into a pension scheme and the employer has to contribute at least 3% to the employees’ pension.

Some women choose to become self-employed instead which means that they no longer benefit from auto-enrolment. Being self-employed and in charge of their own pensions means many women put off making contributions to their pension. This further widens the pension gaps between women and men.

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The gender pay gap

There has been significant progress made to reduce the gender pay gap in society. However, it is still often the case that men still earn more money than women. If the man is the higher-rate taxpayer, then he will receive more tax relief on any pension contributions. In this scenario, for a couple it could be more tax-efficient to save into the man’s pension rather than the woman’s pension. This is a method some couples’ use with their finances however it does mean that the woman has a lower pension value than the man.

How women can prepare better for retirement

The earlier you start saving into your pension pot, the more time that your pot has to potentially grow in value by benefitting from compound interest.

Compound interest is when your initial investment grows in value and then each year you receive growth on top of the growth. This means that even small contributions to your pension pot can make a big difference to your overall pension value over time.

The younger you are, the longer time frame your investments have to grow which means that you might be able to afford to take greater investment risk which you will hopefully benefit from in the long term.

Taking an active interest in your pension will hopefully pay off. It is important that you understand where your retirement savings are invested and how these investments are performing. With auto-enrolment pensions, many employees take a back seat and leave their pensions invested in the default funds which typically underperform.

The benefits of financial advice when planning your retirement

At Four Wealth Management, our financial advisers will help you to understand any existing pensions you hold, what they are invested in and help you to align these with your personal aims and objectives such as what age you want to retire and how much income you will need at retirement.

Decisions you make when planning your retirement can be irrevocable so financial advice could be invaluable in helping you determine the best option for your own circumstances.


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The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is dependent on individual circumstances.

Please note that anything over the basic rate of tax must be claimed via the individual’s tax return.

*ONS, ‘National Life Tables’, 2021

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Why do women have less pension savings than men?
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