The gender pension gap is one of the most persistent and overlooked inequalities in financial planning. While much attention has been given to the gender pay gap, the disparity in retirement income between men and women is often wider, more complex, and more difficult to address.
This gap doesn’t just reflect differences in earnings—it’s the cumulative result of career breaks, part-time work, caregiving responsibilities, and systemic issues within pension systems. For individuals who manage their own pensions, understanding the gender pension gap is essential to making informed, proactive decisions about long-term financial security.
What Is the Gender Pension Gap?
The gender pension gap refers to the difference in average retirement income between men and women. It is typically measured as the percentage by which women’s pension income falls short of men’s. In many cases, this gap can exceed 30%, leaving women significantly less financially secure in retirement.
Unlike the gender pay gap, which is visible in monthly salaries, the pension gap is a long-term issue that often only becomes apparent later in life—when it’s too late to make up the shortfall.
What Causes the Gender Pension Gap?
Career Breaks and Part-Time Work
Women are more likely to take time out of the workforce to care for children or elderly relatives. These career breaks often result in missed pension contributions and lost compounding growth. Even when women return to work, they are more likely to do so part-time, which can further reduce their pension savings.
Lower Lifetime Earnings
Even when working full-time, women often earn less than men over the course of their careers. This not only affects their ability to contribute to a pension but also reduces the value of employer contributions and tax relief.
Pension Scheme Design
Some pension schemes are not well-suited to the realities of modern, flexible working patterns. Eligibility thresholds based on earnings or hours worked can exclude part-time workers—disproportionately affecting women.
Longevity
Women tend to live longer than men, which means their pension savings need to stretch further. Without adequate planning, this can lead to a higher risk of financial insecurity in later life.
The Impact of the Gender Pension Gap
The consequences of the gender pension gap are far-reaching. Women are more likely to experience poverty in retirement, have less financial independence, and rely more heavily on state benefits or family support.
This issue also has broader societal implications. As populations age, the financial vulnerability of older women can place additional pressure on public services and social safety nets.
What Can Be Done to Close the Gap?
Addressing the gender pension gap requires action on multiple fronts—from individuals and employers to policymakers and pension providers.
Increase Awareness and Education
Many people are unaware of the long-term impact of career choices on their pension outcomes. Raising awareness about the gender pension gap and promoting pension education can help individuals make more informed decisions early in their careers.
Encourage Flexible and Inclusive Pension Schemes
Pension schemes should be designed to accommodate part-time and non-linear career paths. Lowering eligibility thresholds and allowing for more flexible contribution options can help ensure that more workers—especially women—are included.
Support for Carers
Recognising and compensating unpaid caregiving work through pension credits or state-supported contributions can help reduce the long-term financial penalty for those who take time out of the workforce.
Promote Equal Pay and Career Progression
While not a pension-specific issue, closing the gender pay gap is a critical step toward narrowing the pension gap. Employers should review pay structures, promotion pathways, and workplace policies to ensure equality of opportunity.
The Role of Policy and Regulation
Government bodies have a key role to play in addressing the gender pension gap. In Ireland, the Pensions Council has actively sought input on how current pension practices contribute to gender disparities. Their consultation on gender gaps in supplementary pensions highlights the need for systemic reform and greater transparency
Policy changes such as auto-enrolment, pension credits for carers, and improved data collection on pension outcomes by gender are all steps in the right direction. Explore the Central Bank’s 2024 findings on gender differences in pension income and read the ESRI’s 2024 analysis on how pension reforms may reduce the gender gap.
Taking Control: What Individuals Can Do
While systemic change is essential, individuals can also take steps to protect their financial future:
- Start early: The earlier you begin contributing to a pension, the more time your money has to grow.
- Track your contributions: Regularly review your pension statements and understand how much you’re saving.
- Plan for career breaks: If you anticipate time out of the workforce, consider how you’ll maintain pension contributions during that period.
- Seek advice: A financial adviser can help you understand your options and build a plan tailored to your circumstances.
Conclusion
The gender pension gap is a complex issue rooted in both social and economic factors. While there is no single solution, greater awareness, inclusive policy design, and proactive financial planning can all contribute to closing the gap.
If you’re concerned about how your career path might affect your retirement income, or if you simply want to ensure you’re on track, our pensions team is here to help. Get in touch today to start a conversation about your future.
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