UK Pensions Commission Urges Action to Close Gender Savings Gap

The revived Pensions Commission is set to tell ministers that a comprehensive overhaul of Britain’s retirement system must include measures to close the gap in private pension savings between men and women, according to the government-backed body.

Women approaching retirement hold roughly half the private pension wealth of men, with a median of £81,000 compared to £156,000, the commission said in data cited ahead of its interim report.

The commission, which is expected to publish its interim report on the long-term future of the retirement system this week, said it would examine how the government could reduce the gender pension gap as part of its work toward a final report with recommendations, expected next year.

Closing the gender gap in private retirement wealth is “not only a matter of fairness” but also that failing to do so risks fueling a rise in pensioner poverty and damaging government finances, the commission said.

First established under Tony Blair’s government in 2002, the Pensions Commission was revived by Keir Starmer last year amid fears that a crisis in saving for retirement could mean today’s workers will be poorer in later life than the current cohort of pensioners.

The relaunched commission is led by Jeannie Drake, who served on the original Blair-era panel, alongside Ian Cheshire, former chair of Barclays UK, and Nick Pearce, a professor of public policy at the University of Bath.

The interim report will draw on data commissioned by the Institute for Fiscal Studies that indicates women face a “motherhood penalty,” as their pension contributions typically stagnate after childbirth.

The IFS found that women contributed about £30 a week on average to a pension before having their first child, a level that remained unchanged six years later.

For men, however, average savings rates grew from about £30 a week to more than £60 a week over the same period.

Women are also more likely to work part-time or leave work entirely due to caring responsibilities, which excludes them from automatic enrollment in workplace pension schemes.

The commission said the United Kingdom has the second-worst gender pension gap among rich countries in the 38-member Organisation for Economic Co-operation and Development, trailing only Japan, despite near-equal state pension outcomes for men and women reaching retirement age in 2026.

Solutions will require a “joined-up approach” involving reforms to pension policy and the labor market, including access to childcare, the commission said.

Lady Drake said: “The evidence is clear. Women are approaching retirement with half the pension wealth of men, and without further action, this difference will persist.

“The gender pensions gap is not simply a reflection of the pay gap, it is shaped by a system that has not yet fully accounted for the realities of many women’s working lives, including career breaks for caring, part-time work, and the motherhood penalty we have identified.

“As this commission moves towards recommending solutions, it will be looking at pension policy measures which can help to reduce the gap – something I believe employers, pension providers and policymakers will need to work on together.”