Interactive Investor

Gender pensions gap is 35%

5th June 2023 11:39

by Alice Guy from interactive investor

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Women in their 40s pay a £58K pension motherhood penalty.

A working mother 600

DWP data released this morning shows that the gender pension wealth gap between men and women is 35%, and 32% for those eligible for auto-enrolment compared with 40% in 2016-18. In comparison, the total pension contribution gap between men and women in 2021 was only 17%, £52 billion for women, compared with £62.6 billion for men.

Between 2008 to 2020, pension wealth for the average woman increased from £50,000 to £94,000 by the minimum private pension age. In contrast, between 2008 to 2020, pension wealth for the average man increased from £85,000 to £145,000 by the minimum private pension age. 

Interactive investor calculations show that women’s pension wealth would reach £80,960 between age 45 to 49, if their pension wealth continued to increase at the same rate as men, between ages 35 to 49, compared to £46,000 in reality. This means women pay a £57,960 motherhood penalty on average in their 40s, as childcare costs and the gender pay gap kick in.



Average pot size male

Average pot size women

Gender pension gap

Average pot size male

Average pot size women

Gender pension gap

16 to 24







25 to 29







30 to 34







35 to 39







40 to 44







45 to 49







50 to 54







55 to 59







60 to 64







65 to 69







70 to 74













Data from ONS.

Alice Guy,Head of Pensions and Savings at interactive investor says: “Women have a pension shortfall of £57K by the time they reach their late 40s as the motherhood penalty kicks in, compared to if their pension wealth increased at the same rate as men.

“Women have lower pension wealth than men at every stage of the journey, but a small gap often becomes an unbridgeable chasm for women in their 40s as a modest 8% gender pension gap increases to 40% for women aged between 40 to 44 and 48% for women aged 50 to 54. 

“Women often bear the brunt of childcare and household chores and are more likely to work part time in their 40s. If women have children, the odds are stacked against them as some of the highest childcare costs in Europe combined with an increasing gender pay gap, make it harder for them to build pension wealth.

“When you’re struggling to pay the bills, lifting your head up and saving for the long term can seem an unsurmountable hurdle, but it’s worth remembering than even small extra amounts paid into your pension add up over time.

“If you’re older and your kids have flown the nest, then it can make sense to up your pension contributions. Contributing an extra £200 per month from the age of 50 could add up to £64,104 by the time you reach 67, assuming 5% investment growth. And that £200 per month will only cost basic-rate taxpayers £160 after tax as pension contributions are tax free.

“If one partner earns significantly more than the other and has a much bigger pension pot, it’s worth considering paying extra into the pension of the lower-earning partner. When you come to draw your pension, it’s not tax-efficient for one partner to earn a lot more than the other and you could end up with a much bigger tax bill as a couple.

“Non-earners can pay up to £3,600 into their pension each year, including tax relief and earners can pay into up to 100% of their earnings, capped at £60,000 per tax year.”

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