The difference between men’s and women’s average state pension income has closed to “essentially zero”, although “substantial” gender gaps remain in private pension incomes, analysis from the Institute for Fiscal Studies (IFS) has revealed.

The study, funded by the Nuffield Foundation, revealed that the state pension income gender gap has narrowed among those born in the early 1950s, in contrast to those born a decade earlier, among whom the state pension income of women was roughly 25 per cent lower than that of men.

However, the research found that gender gaps in private pension incomes persist, as among those born in the early 1950s, women have private pension incomes around 45 per cent lower than men.

The IFS also revealed that these inequalities between men and women remain even for the youngest working-age individuals, implying there will be persistent gender differences in average private pension incomes for decades to come.

According to the research, among all 22- to 59-year-olds, including those not in paid work, 59 per cent of women were saving into a pension in 2019, compared with 66 per cent of men, while average total annual pension contributions were £2,600 among women and £3,400 among men.

The research suggested that the gender pensions gap is almost entirely driven by differences in labour market patterns, including differences in employment rates, hours worked and hourly wages, which particularly open up after the birth of children.

Indeed, it found that savings gaps widened "significantly" after women have children, noting that two years before the arrival of a first child, prospective fathers and mothers make, on average, fairly similar contributions to their pension.

However, six years after the birth of the first child, average contributions made by fathers were more than twice the average contributions made by mothers.

Amongst private sector employees, however, the IFS argued that the gender pensions gap is driven "entirely" by the fact that a higher share of women earn less than £10,000 per year and so do not have to be automatically enrolled into workplace pension saving by their employer.

IFS also clarified that whilst there was little difference in the pension participation of men and women in paid work, this reflects differing compositions of the male and female workforces.

For instance, it noted that whilst a higher share of men (83 per cent) than women (78 per cent) of private sector employees are saving into a workplace pension, more women work in the public sector, where pension participation and contributions are higher, whilst more men are self-employed, where pension participation is very low.

Commenting on the findings, IFS research economist and an author of the report, Laurence O’Brien, emphasised the need for policymakers addressing these inequalities to see it as "part and parcel" of labour market issues.

“Reforms have led to the gap between men’s and women’s state pension incomes shrinking to almost nothing for the recently retired. But gaps in private pension income remain" she stated.

“Labour market gaps are still prevalent even among the youngest generations, and they open up especially after having children. As these generations will not retire for many decades, we can expect a gender gap in pension incomes to remain for a long time yet.

"Policymakers concerned with this gap should see it as part and parcel of labour market issues, as opposed to a completely distinct issue with private pensions themselves.”

Adding to this, Nuffield Foundation welfare programme head, Alex Beer, argued that addressing the gender pensions gap requires a "multifaceted approach, with policies to tackle gender inequalities in the labour market at its core".

People's Partnership director of policy, Phil Brown, also emphasised the need for reform, stating: “This latest research provides further evidence of the many obstacles that need to be tackled if the gender pension gap is to be closed.

"The government needs to come up with ways to enable more women to start saving for their retirement, otherwise the gap will never get smaller.

“The recent announcement that the government is working on ways to measure and report on the gender pensions gap are welcome, but much more needs to be done to enable mothers to return to the workplace or increase their hours if they want to.”

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