John Adams: The factors driving differences in pension outcomes often overlap
The latest of the Pensions Policy Institute’s (PPI’s) regular columns takes a look at the way differences in pension outcomes between genders can be measured and monitored.
The gender pension gap (GPG) describes differences in pension outcomes between women and men.
It is most often expressed as a gap in private pension wealth (the value of private pension rights built up over working life) and/or pension income (payments received from pensions in retirement). However, there's more than one way to measure the gap, understand the factors that drive the disparities and monitor changes.
Different indicators tell different stories
The Department for Work and Pensions (DWP) has, since 2023, published a measure of the GPG. The DWP definition is the percentage difference between female and male uncrystallised median private pension wealth around normal minimum pension age (currently 55) for people who have private pension wealth. They reported a gap of 48% between men and women's savings in the 2025 publication, compared to a gap of 35% in their 2023 report.
Using the pension wealth around the minimum pension age gives a measure of the accumulated differences in saving throughout working life and to understand how this affects retirement options. However, being calculated only for those with pension savings excludes all those who do not have any pension saving. Most of those without pension savings at this age are women – 82% of men have some pensions saving at this age compared to 78% of women so the reported figure understates the size of what the gap would be if everyone were included.
Other approaches could be used and address different questions:
- Including those with no private pension wealth: captures differences in coverage and participation, not only differences among savers.
- Measuring wealth at different ages: helps show how differences develop during working life and how cohorts may differ. This would give more information on how any policy interventions are affecting people saving.
- Using pension income measures: describes retirement outcomes, to reflect the experience of current retirees. This could be used to form intervention policies rather than accumulation policies.
- Separating the driving components of the Gender Pension Gap: explores how much difference is associated with labour-market factors versus pension-system factors, illustrating where any changes could be most effective.
Variations in private pension outcomes can affect financial resilience in retirement. Persistent contrasts in private pension outcomes are also relevant for policy because they relate to how retirement risks and resources are distributed across the population.
What tends to drive differences in pension outcomes
Despite being often summarised as a single figure, the GPG generally reflects a number of factors:
- Earnings: contributions tend to be set out as a percentage of pay so lower earnings mean lower pension contributions, the gender pay gap shows that women tend to earn 12.5% less than men per hour.
- Working patterns: part-time work and variable hours tend to reduce earnings, and therefore contributions, and can interact with scheme eligibility rules. Around 40% of women work part time compared to 16% of men.
- Continuity of employment: time out of paid work typically reduces or stops pension saving and reduces years of pension accrual.
- Caring responsibilities: childcare and adult care can affect hours and continuity of employment, with knock-on effects for pension saving.
- Coverage and scheme type: access to workplace pensions and the balance of different types of pension provision vary across the labour market and affect accumulation. For example, women are more likely to work in the public sector than men which is predominantly defined benefit pensions.
These factors often overlap, for example, caring responsibilities can affect hours, continuity, and earnings.
Regular monitoring is useful
Regular monitoring supports policy discussion by tracking whether pension outcomes are changing over time and by clarifying what any particular measure captures or excludes. The GPG is the cumulative result of long-term patterns during working life rather than short-term decisions. The measurement of different aspects of the GPG are important because they provide a way to assess whether changes in the labour market and pension policy are associated with different outcomes over time.
The forthcoming PPI Gender Pension Gap report due to be published later this year, in follow-up to our 2024 update, examines these measures and their implications in more detail, supporting evidence-based discussion of the gender pension gap.
John Adams is a senior policy analyst at the Pensions Policy Institute
