Could the gender pension gap affect the women in your family?

It is easy to think of a pension as a personal matter. In practice, retirement is something households share. If one partner arrives at retirement with far less saved than the other, it shapes the choices available to both, and it can leave one person exposed later in life if circumstances change.

For most families, that person is a woman. The gap between what men and women hold in their pensions builds slowly over a working life and is rarely the result of a single decision. The good news is that the causes are practical, and so are the remedies. Whether the women in your family are just starting out, in the middle of their careers, or already retired, there are steps worth taking.

Why the gap exists

The gender pension gap is the difference between the average pension wealth held by men and women at retirement. It is much wider than the gap in pay, because the effects compound over decades. Several factors sit behind it:

Time out of paid work. Women are far more likely to take breaks to care for children or, later, for older relatives. Every year away from paid work is a year without workplace pension contributions, and the missed growth on those contributions is lost too.
Part-time work. Returning to work part-time after a break is common. Lower earnings mean lower contributions, and earnings below the auto-enrolment threshold may mean no workplace pension at all.
Lower average earnings. Where pay is lower, so are percentage-based contributions from both employee and employer.
Longer life expectancy. Women tend to live longer, so a smaller pension has to stretch further.
Historic State Pension errors. Some women, particularly those who reached State Pension age before 2016, were underpaid because of gaps in how caring credits and married women’s entitlements were recorded. Corrections are ongoing.

None of these is unusual. Together, they explain why a woman who has done everything sensibly can still reach retirement with a fraction of her partner’s pension.

Why it is a household issue

Couples often plan on the basis of a combined income, and while both partners are together and well, that works. Problems arise when circumstances change. Divorce, bereavement or a period of ill health can leave the person with the smaller pension in a difficult position at exactly the wrong moment.

There is also the question of fairness within the family. Where one partner has stepped back from work so that the other could progress, it seems reasonable that the pension built during those years is treated as shared, rather than belonging to whoever’s name is on it.

Planning retirement as a couple, with both pensions on the table, tends to lead to better decisions. It can also make use of two sets of allowances rather than one, which is often more tax-efficient over a lifetime. This is a conversation we have regularly with clients who are approaching retirement, and increasingly with those in mid-life who still have time to change the picture.

Practical steps at any age

The right action depends on the stage someone is at, but these steps apply to most people.

Check the State Pension forecast

The government’s online service shows how much State Pension someone is on track to receive and whether there are gaps in their National Insurance record. Gaps from years spent caring may be fillable with credits, and in some cases voluntary contributions can be worthwhile. Anyone who thinks they may have been underpaid can check with the Department for Work and Pensions.

Trace old workplace pensions

People who have moved jobs several times often have small pensions they have lost track of. The Pension Tracing Service can help locate them. Bringing them together may simplify things, although it is not always the right move, and advice is sensible before transferring anything.

Review contribution levels

Auto-enrolment minimums are a floor, not a target. Where budget allows, increasing contributions, even by a small percentage, makes a large difference over time. Some employers will match higher contributions, which is effectively additional pay.

Keep contributions going through career breaks

A partner can pay into a pension on behalf of someone who is not working, and basic-rate tax relief still applies on contributions up to £2,880 a year (£3,600 gross) for a non-earner. Maintaining even modest contributions during a break avoids a complete gap in the record.

Plan as a couple

Looking at both pensions together, and at how retirement income will be drawn and from which pot, allows a couple to balance the position. It also means both partners understand the plan, which matters if one is left to manage it alone.

Start the conversation early

Daughters and granddaughters starting their careers have the greatest advantage of all, which is time. Encouraging them to join a workplace scheme from the first job, understand what their employer contributes, and avoid opting out can set them on a very different path. Our young professionals page is a good place to begin.

If retirement has already arrived

For women who are already retired, the options are narrower but not absent. It is still worth confirming that the State Pension being paid is correct, checking whether any small pensions have been overlooked, and reviewing how a couple’s combined income is being drawn. Where one partner has a much larger pension, decisions about how it is taken, and what happens to it on death, deserve careful thought, particularly in light of the changes to the Inheritance Tax treatment of pensions from April 2027.

The aim is not to look back at what could have been done differently, but to make sure the years ahead are as secure and comfortable as they can be. Our in retirement page describes how we approach this.

Questions to discuss with an adviser

What is the gender pension gap?

It is the difference between the average pension wealth of men and women at retirement. It is driven mainly by career breaks for caring, part-time work and lower average earnings, and it is considerably wider than the gender pay gap because the effects compound over a working life.

Can I pay into my partner’s pension?

Yes. Anyone can contribute to another person’s pension. Where the recipient has little or no earnings, contributions of up to £2,880 a year usually attract basic-rate tax relief, bringing the total to £3,600. Higher amounts are possible where the recipient has relevant earnings.

How do I check whether my State Pension is correct?

Use the government’s State Pension forecast service to see your entitlement and National Insurance record. If you reached State Pension age before 2016 and spent time caring for children or were married, it is worth checking whether you were affected by the known underpayment issues.

Is it worth filling gaps in my National Insurance record?

It can be, particularly where a few missing years would lift you to the full State Pension. Some gaps can be filled with free credits for caring. Voluntary contributions cost money, so it is worth checking the position before paying.

What happens to a pension on divorce?

Pensions are usually treated as part of the assets to be divided. A pension sharing order can transfer part of one partner’s pension to the other. This is an area where financial and legal advice should work together.

About the author

Peter Rose APFS is a financial planner at Aetas Wealth, advising private clients, families and business owners across the UK on retirement and later-life financial planning. His work includes helping couples plan retirement income together, review State Pension and workplace pension entitlements, and understand how pension, investment and estate planning fit together as the rules change.

A conversation with Peter Rose or another member of the Aetas Wealth team is a chance to look at both partners’ pensions together, identify any gaps, and agree a plan that works for the whole household. Arrange a retirement planning conversation.