The gender pension gap averages between 30% and 40%—so, what can we do about it?

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Katie Whitford

Partner at Sackers Pension Law Firm

The gender pension gap is a widespread global issue, often resulting in women having lower levels of economic security in old age compared to men.
The gender pension gap refers to the average difference in pension wealth between men and women, which is estimated to typically range from 30% to 40%.
To close this gap, it is essential to address issues such as disparities in occupational pensions and historical gender-based welfare inequalities.

The gender pension gap is a widespread, deeply impactful global issue, often resulting in women having significantly lower levels of economic security in old age compared to men. This gap refers to the average difference in pension wealth between men and women, which is estimated to range from 30% to 40%, though variations remain substantial across countries.

Because women typically live longer than men on average, they usually need to save more funds to support a longer retirement life.Therefore, a decline in pension wealth will lead to a further drop in the living standards of elderly women and increase their risk of poverty.

Although the gender gap in pensions has a significant impact, research and reporting on this disparity have historically been inadequate compared to other gender gaps, such as the gender wage gap. However, as the economic and social implications of an aging population gain increasing attention, the pension gap is gradually emerging as a key concern for many governments and policymakers.

Identifying the gap is an important first step, but it’s not straightforward. There are several ways to define and measure this disparity, such as examining pension wealth accumulated across different age groups (including both private and state pensions) or assessing pension income levels in retirement.

Comparing pension wealth across different age groups—both men and women—can particularly help identify the various factors contributing to these disparities and forecast how those gaps might evolve in the future. However, this analysis requires robust data, which may be even harder to gather than data on retirement income itself.

Why does the pension gender gap exist?

While the gender pension gap is partly driven by the gender wage gap, there are other significant contributing factors, including:

Part-time workers and low-income individuals—both groups more likely to be women—are excluded from the occupational pension system.
Historical disparities in pension benefits between men and women
Differences in pension contribution rates and investment risk preferences
Handling of pension benefits in the divorce agreement

The gender division of caregiving roles and the fact that women leave the workforce due to caregiving responsibilities are considered particularly significant factors. For instance, the UK-based independent charity, the Pensions Policy Institute, estimated in a 2019 report that differing work patterns have reduced British women’s pension wealth by as much as 47%.

For women participating in defined-contribution pension plans—where benefits are determined by the amount contributed plus investment returns, minus costs and fees—career interruptions can have a profoundly negative impact on their retirement outcomes, as the loss of compounding investment returns becomes increasingly evident over time.

IWhat can we do about the pension funding gap?

We surveyed labor lawyers from 16 countries and received feedback that highlighted diverse approaches to addressing the gender pension gap. While the size of the gap and its underlying causes vary significantly across countries, and each nation’s pension systems differ in their specifics, several common themes still emerged.

Unsurprisingly, the gender wage gap is frequently cited as a fundamental cause of the pension gender gap. To address this issue, significant efforts have already been underway worldwide, and over time, these initiatives are expected to positively impact the disparity in pension outcomes between men and women.

For example, Cyprus’s latest regulations encourage flexible working arrangements and remote work, while also extending maternity leave. Cyprus has also introduced other types of family leave to help support women’s participation in the labor market. Meanwhile, the Netherlands and Finland are striving to promote greater gender equality in balancing work and childcare responsibilities through reforms to their parental leave policies.

The reform of the national pension system can also have a positive impact on narrowing the gender gap in pensions. Chile implemented reforms, including a universal, state-backed national pension scheme, which primarily benefited women—since they typically have less access to private pension plans.

Meanwhile, Mexico has reduced the number of work weeks required to qualify for a pension and amended its constitution to ensure that everyone—regardless of their employment history—can receive a pension, significantly boosting women's access to retirement benefits.

However, these initiatives must start somewhere—often with the first step being to measure and monitor the gaps. For instance, in Luxembourg, there is a significant disparity between the gender pay gap (0.7% in 2020) and the gender pension gap (44% in 2019). Meanwhile, the UK government introduced metrics for measuring the pension gender gap in June 2023 and has pledged to report on it annually.

Our survey feedback indicates that awareness and understanding of the gender gap in pension systems are steadily growing— a trend we hope will continue. Looking ahead, this evolving field is expected to undergo further transformation in the coming years. However, the full impact of policy changes may take considerable time to materialize, and progress often unfolds gradually.

Pensions are wealth accumulated over a lifetime, yet policy changes typically do not have retroactive effect. This means that today’s retirees may still be affected by inequalities that originated as early as the 1980s—or even earlier.

Change isn’t always linear, either. For instance, between 2010 and 2019, while the gender pension gap narrowed in most EU member states, six countries actually saw the gap widen instead.

Notably, other types of pension gaps—such as those related to disability and race—remain largely underreported and receive relatively little media attention. We hope that the growing concern over retirees needing adequate financial resources to maintain their quality of life will also draw greater focus to the broader issue of addressing other inequalities.

The above content solely represents the author's personal views.This article is translated from the World Economic Forum's Agenda blog; the Chinese version is for reference purposes only.Feel free to share this on WeChat Moments; please leave a comment below the post if you’d like to republish.

Translated by: Sun Qian | Edited by: Wang Can

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