Let’s end women’s £113,000 pension penalty

New Scottish Widows Retirement Report reveals widening gender pension gap – here’s how to close it.
 

Aside from my day job supporting workplace pension clients and members I am driven to support women’s financial empowerment and doing what I can to help effect change.

Whether it’s leading our team at Women in Work events, presenting to business leaders at Google in November, or the release of our 21st Women & Retirement Report just out, supporting women to grow their finances throughout their lives is what I’m most passionate about.

The 2025 Women & Retirement Report (PDF, 3MB) shows why.

Gender pension gap reveal

Women are on track to retire with £113,000 less than men, with an average annual retirement income of £13,000, compared to men’s £19,000. That’s a third less. 

That gap has widened slightly to 32% after narrowing last year. After that moment of optimism, it seems to be case of two steps forward, and one step back.  

The reasons why the gap is so stubborn are clear. It’s a stark reflection of the realities of women’s unequal pay, career breaks when having children, lack of shared parental leave and wider structural differences that have worked against women.  

Health too plays a big part, with life stages like the menopause or caring for elderly and infirm parents having a profound effect on women’s financial wellbeing throughout their lives. Yet challenges like these are too often left out of the conversation. It’s something me and my team discuss in depth in the latest Scottish Widows podcast.

Biggest driver

One of the biggest drivers of the gap is the impact of taking a career break to raise a family on a woman’s career, income, and pension contributions.  

Half of all women take a career break, and they are 12 times more likely to do so than men. And 40% of women didn’t financially plan for their career break so more than half (51%) then found it difficult. 

Some leave the workforce for five years or more, with pension contributions paused, often without a solid understanding of how it will affect their finances in the long-term. Emergency savings take priority. Investment opportunities are missed. Retirement planning is pushed out of mind or to the very bottom of the list. 

Getting women on a better financial footing means looking at all these things, and how health, wealth and their focus on themselves, interconnect.

Taking action

The crucial question is what can we do to improve things? It’s time to press harder for real and lasting change so that women can build their finances from the time they start work and join their pension scheme, through to building their career and the moments that matter throughout their lives.

Alongside this year’s report, we’re incredibly proud to have launched our Career Break Modelling Tool within our app. It’s designed to help everyone – and especially women – understand the long-term financial cost of stepping away from work and to plan with more confidence for the future.
 

They can explore how different choices affect their retirement savings, identify ways to boost their pension, and understand how investing can help them build wealth – something men are more comfortable at doing on top of a pension. 

The report also details how employers and policy makers can make a difference – and I’d press for the delayed auto enrolment reform to be back on the agenda to bring part-time and lower paid workers into scope. Most of them will be women. Employers meanwhile could continue to pay pension contributions during maternity leave, as could their spouses or partners. 

We’re working closely with business leaders to commit to supporting women more, too. I hope to be able to report back on that for International Women’s Day next March.

Financial guidance and support

In this year’s research, women told us that they need better decision-making support, too. The new ‘targeted support’ framework from the FCA could make this possible without having to levy an advice charge. Younger women are the most likely to see the potential in these digital-first services which can offer financial guidance throughout their lives – and that will make a real difference. 

Because when we give women the tools, knowledge, and support, we don’t just close gaps. We help them create more secure futures. 

The Women & Retirement Report 2025 (PDF, 3MB). 

Find the new career break tool in the Scottish Widows app. 

Download the new Women & Retirement podcast which discusses careers, families, parenting, caring commitments and how to plan and where to get support and tips to save for the future.