"Women Approaching Retirement Have Half the Savings of Men" - What the Pensions Commission Just Said

A new interim report names a structural problem in UK retirement saving. Here's what it says, what it actually means, and why it matters for anyone planning early retirement.

3 min read - Part of News & Updates at FreeBefore65.

A note before I start. This is written from a man's perspective. I can describe what the Pensions Commission reports, name the structural causes, and think about what it means for household planning. I can't write from inside the experience of being a woman whose pension is structurally smaller. Worth keeping in mind as you read. 

The headline is striking. Women approaching retirement have a median private pension wealth of £81,000. Men have £156,000. That's from the Pensions Commission's interim report, published today. 

The cause named in the report isn't pay alone. It's the motherhood penalty. Before having their first child, women and men contribute roughly the same, around £30 a week into pensions. Six years later, men's contributions have doubled to over £60 a week. Women's haven't moved. That's where the gap accumulates over a working life. 

The broader picture is starker. Around 15 million people are under-saving for retirement. A further 18 million working-age adults aren't saving at all, and of the wholly self-employed only 4% are actively saving. The gender gap sits inside a much bigger problem of structural under-provision. 

For anyone planning early retirement, three things matter from this report:

1. The household number is rarely two equal halves. If you're a couple, the lower-pot partner's individual bridge years will be tighter than the higher-pot partner's. Worth modelling explicitly rather than averaging. 
2. Women planning their own early retirement may need to look at their pot more carefully. The £81k figure is a median, which means half of women approaching retirement have less. If you're in that distribution, the bridge years arithmetic changes. 
3. The 2027 final report will recommend changes. Auto-enrolment rules are the most likely target, particularly the £10,000 earnings trigger that excludes a lot of part-time workers, who are disproportionately women. Whether the recommendations land in policy is a separate question, but the direction of travel is now reasonably clear. 

The FreeBefore 65 take: the gap is a household planning issue as much as a women's issue. Treating it only as the latter lets couples avoid the harder conversation about who's saved how much and what that means for the years on the other side of work. 

Part of News & Updates at FreeBefore65.

Tony writes about his personal journey to early retirement at freebefore65.co.uk. He is not a financial adviser. All content reflects his own experience and research and should be taken as a starting point for your own thinking, not as professional advice.