Interactive Investor

Men already on track for bigger pension by age 45

Alice Guy, our head of pensions, explains how the gender pensions gap reflects the motherhood penalty.

10th June 2024 16:14

by Alice Guy from interactive investor

Share on

A nest egg full of gold eggs

With the Liberal Democrat manifesto, launched today, highlighting the gender pensions gap, interactive investor issues staggering data highlighting the scale of the challenge of the gender pensions gap, but how investing can help women build pension wealth.

interactive investor research has found:

  • By 45, men are on track for a bigger pension pot in retirement on average, even if they make no more contributions and women keep contributing 8% of their salary
  • Women need to contribute 22% of their salary from age 45 to match the average man by retirement age
  • Women need to pay in £213 per month more than men from age 45 to match their pension pot by retirement age 
  • The recent interactive investor Q1 index shows our female customers have outperformed male customers on average over the past three years.
  • Many of the myths surrounding the ways women invest don’t resonate with female investors, and may be holding them back.

Government data on the gender pension gap reveals there is a 48% pension gap between men and women by the time they reach age 45, with men having £88,000 in their pension on average, compared to £46,000 for women.

This gap is set to expand over the next few years as investment compounding and lower women’s average pay both impact on future retirement wealth.

Alice Guy, Head of Pensions and Savings, interactive investor says: “It’s eye-opening that men are already on track for a bigger retirement pot on average by their mid-40s even if they don’t pay a penny more into their pension.

“That’s mainly due to the motherhood penalty as women often take the main responsibility for caring for children, with a huge knock-on impact on earnings and pension wealth. Women are more likely to care for children and work part time in their 40s and beyond and are more likely to become carers later in life.

“It’s a double whammy as the impact of investment compounding also works in favour of those who have bigger pots in mid-life. Men have almost twice as much saved by their mid-40s, and that gap will continue to grow as investment returns snowball over time.

“Data from our 2023 interactive investor Great British Retirement Survey reveals that women are more likely to have no pension pots or savings than men – 72% for women versus 82% for men. They also have much lower expectations for retirement income – £17,200 for women versus £25,200 for men.

“If you’re in a relationship, then it’s vital to plan your finances as a couple and discuss your future financial plans together. Talking about your pension savings and retirement plans makes it easier to set financial goals for the future.

“If your pension pot is lagging, then it’s encouraging that even small amounts of extra pension saving make a big difference by the time it comes to retirement. Saving just £50 more each month for 30 years could add over £50,000 to your pension wealth in retirement.”

Camilla Esmund, Senior Manager, Public Relations, at interactive investor, adds: “It is interesting to see the gender pensions gap explicitly referenced in the Liberal Democrat manifesto, particularly within the context of such a complex and ever-changing pensions landscape. The gender pensions gap, and more broadly – the gender investment gap – is alarming and deserves urgent attention. We need to be having more conversations about how we can encourage and empower more women to invest, and how we can remove some of the barriers for women building their pensions wealth.

After all, the good news is that women are fantastic at investing. In our most recent interactive investor Q1 index, ii’s female investors slightly overperformed men over the last three years, averaging 18.7% returns between January 2020 to March 2024, compared to 18% for male investors. This is a consistent trend we have seen with our performance data. And we also know that some of the myths surrounding the way women invest versus men don’t hold up to further scrutiny.

In fact, our data shows that men and women on ii invest along similar lines. It is simply not good enough, nor useful, to assume that women are ‘cautious investors’ and men are not. There are many reasons for the gender investment and pensions gap, but it is not because of capability or even, necessarily, approach. These generalisations could be holding many women back from investing, and from finding the investments and products best suited to them.”

A closer look at the gender pension gap data:

Gender pension gap




% gap

Pension wealth at aged 45





At 68 with no more contributions





At 68 with 8% contributions





At 68 with 22% contributions





Assumptions: 5% annual investment growth net of fees, based on pension wealth at 45-49 and additional investment for 23 years up to retirement age, using ONS earnings data for median salary - £34,810 for men and £24,683 for women.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Get more news and expert articles direct to your inbox