While some progress has been made over the years, the gender pay gap remains stubbornly wide. This gap follows them through their life and well into retirement, resulting in a gender pension gap fuelled by persistent pay disparities and career breaks linked to childcare.
The latest employee workplace pensions statistics from the Office for National Statistics reveal this gender gap remains in private sector pension savings, with 76% of female employees having a workplace pension compared to 81% of male employees. What’s more, women are receiving lower average employer contributions. Using qualifying earnings for the public sector, the median employer contributions were 27% for men and 26% for women, and in the private sector, median employer contributions were 6% for men and 5% for women.
Holly Tomlinson, financial planner at Quilter, shares three tips to help you prepare for the future and make the most of your finances: “The gender pay and pension savings gap during working life is substantial, and this inevitably carries through into retirement, leaving women with far smaller pension pots. Women also continue to take on the lion’s share of caring responsibilities, which directly feeds into why these gaps persist. Without careful financial planning, the long-term consequences of this can be significant.
Protect your State Pension
“One of the most important steps mothers can take is ensuring their state pension record stays intact during periods away from paid employment. Time spent caring for children is incredibly valuable, yet it can unintentionally create gaps in National Insurance contributions. Completing the child benefit claim form, even if you don’t meet the criteria, ensures NI credits are retained.
“For women who have already experienced career breaks, it is also worth reviewing whether voluntary contributions could help close any gaps. These small steps can make a significant difference to your entitlement in later life, and they help prevent women from falling further behind in retirement compared to their male counterparts.”
Continue pension contributions wherever possible
“Maintaining pension contributions during childcare years can be challenging, but even small amounts can make a meaningful impact over the long term. Women often reduce their working hours or take extended breaks from employment when raising children, which naturally results in lower pension savings. But consistency, even at a reduced level, helps ensure the compounding effect of long-term investing isn’t lost.”
Reassess your long-term financial plans after major life changes
“Starting or expanding a family is one of the biggest financial transitions anyone can experience, and it’s important to revisit your long-term financial plans when your circumstances change. That means reviewing your retirement goals, ensuring you have an up to date will and a plan in place to pass on your wealth, and putting the right protections in place should the worst happen.
“Protection products such as critical illness, life assurance or income protection are often provided by employers as a workplace benefit. However, for mothers taking a career break this can mean that they are left unprotected.
“In addition to having protection in place for the mother while she is out of work, the primary earner will also need to make sure their cover is substantial enough. Childcare can be enormously expensive and if the primary earner needs to flex their hours to allow them to also become the primary carer, be that because the mother has fallen ill or worse passed away, then this can have a huge impact on a family’s finances. Having financial protection in place for a single mum is even more important as the family will be totally reliant on her income.”
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