Mind the 39% gender pension gap

Frontier Economics have supported Scottish Widows in their 2023 Women & Retirement report, which looks at the gender pension gap and how to close it.

You’ve heard of the gender wage gap. But did you know the gender pension gap is over twice the size? The average woman is on track for 39% less retirement income than the average man.

We supported Scottish Widows to assess the retirement outcomes that different groups of people are on track for and what can be done to improve these outcomes. We wanted to paint as complete a picture of retirement outcomes as possible, and so we estimated the private pension, other long term savings, inheritance and state pension retirement income people are on track for, as well as accounting for any expected housing costs in retirement.

We found the average women is on track for £12,000 per year in retirement after paying for any expected housing (in today’s money), compared to £19,000 for men – so a gap of 39%.

And how far will that £12,000 go? The Pensions and Lifetime Savings Association estimates a single person needs £12,800 per year for a “minimum” lifestyle which covers basic needs, whilst couples need £19,900 (it’s more if you live in London). This means that most people in couples are going to be ok, but a lot of single women are at particular risk of facing poverty in retirement. We find the most at risk group are single mums, 75% of whom are not on track for affording their basic needs in retirement.

So why are women on track for worse retirement outcomes? First, women tend to have lower wages than men (this is the gender wage gap). And second, this then gets compounded by women tending to work fewer hours over their lives, most commonly due to childcare. 37% of mothers have had to leave jobs and 47% have had to move to part time work to look after their children.


What can be done to close the gap? The Government’s changes to automatic enrolment are a good start, but more can be done. Scottish Widows' report sets out policy asks to government and recommendations to employees, women and partners. Take a look and see how you can help make sure you and your family are set up for retirement.

Frontier regularly advises on public policy issues in the financial services sector.

For more information, please contact media@frontier-economics.com or call +44 (0) 20 7031 7000.