A 19-Year Shortfall
Recent data from the Pensions Policy Institute reveals a sobering truth: UK women need to work an extra 19 years on average to retire with the same pension savings as men. This disparity, often referred to as the gender pension gap, is even more severe than the gender pay gap and its impact lasts far beyond a working lifetime.
At Herbert Scott Financial Planners, we work with clients every day to help them build resilient, long-term financial plans. And for women in particular, one of the most powerful tools for closing this gap is the pension. Yet pensions are still underutilised, misunderstood, or deprioritised especially during times of financial stress, life transitions, or career breaks.
Why the Pension Gap Exists
The causes of the gender pension gap are complex and interlinked:
- Career interruptions: Women are far more likely to take time out of the workforce to raise children or care for relatives.
- Part-time work: Nearly three-quarters of part-time workers in the UK are women, often with reduced or no access to workplace pension schemes.
- Gender pay gap: Lower earnings throughout a career naturally lead to smaller contributions.
- Longer life expectancy: Women typically live longer, so they need more retirement savings to sustain a comfortable lifestyle.
- Financial prioritisation: In many households, women are more likely to direct finances toward family needs, deferring their own long-term goals.
All of this culminates in a scenario where women often reach midlife with significantly smaller pension pots than men – and less time to catch up.
The Case for Pensions Over ISAs
At Herbert Scott, we strongly advocate for the use of pensions as a core long-term financial planning tool. While ISAs (Individual Savings Accounts) offer flexibility and accessibility, pensions offer unrivalled tax advantages and discipline, particularly for retirement savings.
Due to the age restrictions on accessing pension savings, individuals often view these products as longer-term investments. This is particularly valuable because pension funds are less likely to be dipped into during tough times, unlike ISAs. The compounding growth and tax relief available through pensions can make a substantial difference.
Let’s look at a typical 20-year scenario. Imagine someone contributes £100 per month to either a personal pension, a workplace pension, or an ISA:
| Contribution Type | Value at 20 Years | Total Paid In |
|
Pension (with Employer) |
£93,742 |
£48,000 |
|
Pension (Personal Only) |
£52,079 |
£24,000 |
|
ISA |
£41,663 |
£24,000 |
These figures assume a 5% annual growth rate. As you can see, a pension with employer contributions dramatically outperforms both a personal pension and an ISA. Even the personal pension – with the benefit of tax relief – outpaces the ISA by more than £10,000.
Clients often refer to employer contributions as ‘free money’. It’s essentially a 100% return on your contribution, right from the start. Ignoring that is leaving money on the table.
Why This Advice Is Especially Important for Women
Because women are more likely to experience income gaps or lower earnings, maximising every opportunity for pension growth is crucial.
And while some women may worry about locking money away until retirement, this could be seen as a feature, not a flaw. Pensions are not as visible or accessible, which makes them harder to dip into. That’s a good thing. It creates a discipline around saving that many people lack with more liquid assets.
For self-employed women in particular, pensions are often underutilised. With no automatic employer contributions, and greater income variability, pensions can fall by the wayside. But with proper planning and regular, even modest, contributions, these individuals can still build strong retirement funds while benefiting from significant tax relief.
Financial Autonomy Through Planning
One of the most empowering aspects of pension planning is the sense of control and independence it offers. For many women, retirement planning isn’t just about finances – it’s about freedom. It’s the ability to make life decisions from a place of security, not dependency.
Building long-term savings pots can empower women to take greater control of their financial futures and achieve independence from their partners. Financial autonomy is known to be a crucial step toward overall wellbeing and resilience.
This is particularly important in scenarios such as divorce, widowhood, or long-term illness – when the presence (or absence) of personal retirement savings can drastically impact quality of life.
The Role of Financial Advisers: A responsibility to be part of the solution
While the gender pension gap is influenced by structural issues like pay inequality and caregiving responsibilities, financial advisers also have a key role to play in bridging the divide. As highlighted in The Financial Times (May 2025), at the current rate of progress, it could take another 20 years to close the pension gap. That’s far too slow – and it calls for a more proactive, client-focused response from within the profession.
The average retirement income for men in the UK is £19,000, while for women it’s just £12,000 – a difference that leaves many women facing financial vulnerability in later life. This isn’t just a statistic – it’s a wake-up call for the advice community.
What Advisers Can – and Must – Do
- Start the pension conversation early and often
Many women don’t receive dedicated advice about retirement until their 40s or later. Advisers must take the initiative to talk to female clients about pensions from their 20s onward – even when it feels like retirement is a distant goal.
- Tailor advice to life stages
Women experience different financial pinch points – maternity leave, career breaks, part-time work, or care-giving responsibilities. Advisers should help plan for these transitions and build pension strategies that are flexible yet resilient.
- Encourage continued pension contributions during career breaks
One of the most practical pieces of advice is to continue – even modest – pension contributions during parental leave or career gaps. Creating awareness and modelling the long-term impact of stopping contributions can make a critical difference.
- Include pensions in divorce and separation planning
Research shows pensions are often overlooked in divorce settlements. Advisers have a responsibility to ensure women understand their entitlement to a share of pension assets and receive proper advice during these negotiations.
- Build confidence, not just portfolios
Studies repeatedly show women are just as capable at managing money – but far less confident than men. A good adviser takes the time to educate, explain, and empower female clients to make confident long-term decisions, including taking calculated investment risk to grow their wealth.
What Women Can Do Now
Whether you’re just starting out or already mid-career, it’s never too late to take action. Here are some practical steps women can take now to close the pension gap:
- Opt in, and stay in, a workplace pension scheme. Even if contributions feel small, they add up over time, especially with employer matching.
- Increase contributions when you can – such as after a pay rise or return to full-time work.
- Make the most of tax relief, especially if you’re self-employed or running a limited company.
- Use financial planning software or tools to visualise the long-term impact of your decisions.
- Speak to a financial planner – professional advice can uncover opportunities you didn’t know existed.
Let’s Close the Gap – Together
The gender pension gap may be wide, but it is not unbridgeable. With smart decisions, consistent contributions, and the right guidance, women can reclaim their financial futures – one pension payment at a time.
At Herbert Scott, we are here to help you plan with confidence. If you’d like to understand your pension options or map out your financial future, speak to one of our Chartered Financial Planners today.
Stacey Chamberlain is a Chartered Financial Planner at Herbert Scott in Lewes.