PLEASE KEEP READING. I know that most people find pensions a terrible combination of important, complicated and boring. And women tend to engage less with financial planning compared to men, which then impedes our ability to make more informed decisions. We need to discuss pensions and finance in female spaces, for ourselves and for the women around us.

For example, I worry that women are inadvertently making choices in their working pattern that will result in them having a lower income in later life.

I’m not a financial advisor nor do I have any qualifications when it comes to finance. But I have spent a good chunk of my marketing career in the pensions and long-term savings industry. And I have seen too many charts showing that women’s pension pots continue to be much smaller than men’s.

What is the Gender Pension Gap and what causes it?

The Gender Pension Gap is the difference between men’s and women’s pension pots, which then result in smaller income in later life. According to one provider, the average UK pension pot for men over 50 is £84,205 vs just £39,654 for women of the same age.

The Gender Pension Gap is created by several factors. As you’d imagine, the Gender Pay Gap is a major contributor – as of 2024, the average hourly pay for women in the UK was 13.1% less than for men.

As well as the rate of pay, the number of hours women work is also a major contributing factor to the Gender Pension Gap.

Part time work = Part time pension

In the UK, women are disproportionately responsible for childcare and caring for elderly family members. The assumption that women will take on caring responsibilities means that more women spend fewer hours in paid work. Fewer hours result in lower pension contributions, which then result in a far smaller pension pot over time.

Standard Life estimate that for someone earning £25,000 a year, switching from full-time work to working part-time 3 days a week could lead to £58,000 less in retirement, allowing for inflation. And if you earn more than £25,000 a year, the gap would be proportionately bigger. Ouch.

Time makes money more than money makes money

If you contribute less to your pension in the middle of your career, you’re also reducing the benefit that compound interest and long-term investments can have on your savings.  OH NO, I NEARLY LOST YOU AGAIN. All that really means is that the longer you put your money away for, the harder that money works for you.

As an example, I recently re-discovered my first pension, which I contributed to for about 18 months between 2005 and 2007. I then lost the paperwork for the best part of 20 years. When I found that pension again (using the HMRC pension tracing service), I was delighted to see that compound interest and the stock market had more than tripled its value. “Money x time” is an effective formula.

If you work fewer hours in your 20s, 30s or even 40s and make lower contributions, you are missing out on the benefit of decades of compound interest and long-term investments that would have helped your pension grow further faster.

Freelancers miss out even more

As we know, many women in our industry find they need to step out of employment entirely for a better work / life balance. But self-employed people generally have smaller pensions. And they also miss out on workplace pension contributions from an employer – i.e. the money employers have to put into your workplace pension pot, providing you make the required minimum contribution.

Implications

I’m not advocating everyone must work full time their whole career. Every woman needs to figure out the working pattern than works best for them and the people they love. But when weighing up your options, please don’t just think about the short-term horizon. Consider your pension and longer-term financial position too.

Encourage every woman that you know to start contributing to their pension as soon as they can, with as much as they can, to make the most of that compound interest. Even £50 more a month will make a difference over time.

Track down any old pensions using the Pension Finder service. You might be surprised by how much they’re worth now.

As an industry we talk about how more needs to be done to retain female talent, so we don’t miss out on their experience and knowledge. There is also an imperative to better support women as they decide their working patterns, so they can be more informed about the potential impact on their financial future. 

Virginia Barnes is a Brand and Marketing Director with more than 20 years' experience building household brand names across sectors (Nuffield Health, Thames Water + Standard Life UK). She finished an interim contract at Standard Life in December and is looking for her next opportunity.