Why do some women experience poverty in their retirement?
A comfortable retirement is a goal many of us strive for throughout our lives. However, for many women, this goal remains out of reach. New analysis reveals a stark truth: more than a third (36%) of women are projected to face poverty in their retirement years[1]. This issue, often called the ‘gender pension gap’, arises from a complex mix of societal norms, career breaks and financial planning oversights that unfairly affect women.
The financial disparity often begins with career breaks. Research for the 2025/26 tax year indicates that 58% of women approaching retirement have taken a significant career pause, compared to just 12% of men. The primary reason for this is childcare, with women being 12 times more likely to suspend their careers to raise a family. These pauses lead to immediate income loss and, more crucially, create substantial gaps in pension contributions that accrue over time.
Long-term cost of a career break
The financial impact of taking time out of the workforce is significant. For example, a woman who takes a five-year career break at age 35 could see her final pension fund reduced by as much as £70,000. This notable figure results from missed contributions from herself and her employer, as well as the lost investment growth that would have accumulated during those years. By the time she reaches the State Pension age of 67, her retirement savings could be considerably lower than those of a peer who worked continuously.
Although data suggests that women may manage their daily finances more carefully than men during a career break, there is a notable shortcoming in long-term planning. A worrying 40% of women admit they did not plan financially for their time away from work. Moreover, over half (56%) never considered the significant impact it would have on their retirement prospects. This lack of foresight means many women are unknowingly living with a pension shortfall that will only become clear when it is too late to address.
Bridging the pension divide
To achieve true equality in retirement, we must ensure that career breaks do not threaten a woman’s future financial security. A simple way to address this is by raising awareness and encouraging the use of Shared Parental Leave. This policy aims to allow parents to share childcare responsibilities more equally, yet surprisingly, 80% of women who have had children in the last decade did not utilise it. For many, a lack of support from their partner’s employer was a major obstacle.
Another practical step is for spouses to make contributions to their partner’s pension during a career break. This process, known as a third-party contribution, is an effective financial planning tool that is often overlooked. It not only helps fill contribution gaps when earning capacity is reduced but also provides tax relief benefits for the contributor. Employers also have a crucial role, as their pension contributions during maternity leave are typically based on the employee’s pre-leave salary, offering a vital safety net.
Taking control of your financial future
The path to a secure retirement demands proactive planning and awareness of potential risks. Recognising the long-term financial impact of a career break is the first step in mitigating those effects.
By exploring options such as Shared Parental Leave, spousal contributions and maximising employer schemes, women can gain greater control over their financial futures and work towards closing the gender pension gap once and for all.
Source data:
[1] The Women and Retirement Survey was conducted online by YouGov Plc from 29 August to 8 September 2025 across a total of 4,091 adults aged 18+, weighted to be representative of the UK adult population. The survey asked general questions on pensions and retirement planning, as well as savings, investments, career breaks and financial planning behaviours.
This article is for information purposes only and does not constitute tax, legal or financial advice. Tax treatment depends on individual circumstances and may change in the future. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Investments can fall as well as rise in value, and you may get back less than you invest.
