36% of Women Could Face Poverty in Retirement – Why This Matters More Than Ever
According to Scottish Widows’ Women and Retirement Report 2025, 36% of women are likely to face poverty in retirement. This is a stark reminder of the growing gender pension gap, which has widened from 30% to 32%. Women are now on track to retire with an average income of £13,000, compared to £19,000 for men.
Why Is the Gap Growing?
Career breaks are a major factor:
- 58% of women at or near retirement have taken a career break (vs 12% of men)
- Women are 12 times more likely to take time out to raise children (36% vs 3%)
These breaks lead to lost income and gaps in pension contributions, creating long-term financial disadvantages that compound over decades.
Expert Perspective
Jill Henderson, Head of Workplace Strategic Relationships at Scottish Widows, explains:
“Last year marked 20 years of the Scottish Widows Women and Retirement Report, in which we said it would take at least another two decades before the gender pension gap was closed. In this year’s report we’ve actually seen that gap widen further from 30% to 32%, resulting in women on track to retire with an average retirement income of £13,000, compared to £19,000 for men.”
This comment underscores the urgency for employers and policymakers to act now.
The Bigger Picture
Other research supports these findings:
- TUC reports women retire with £7,600 less per year than men
- Government data confirms a 48% gender pension gap in private pensions
The financial consequences are stark: reduced independence, increased reliance on state benefits and heightened vulnerability to poverty in later life.
Industry Response: Collaboration for Change
The Pensions Equity Group (PEG), a coalition of over 20 leading providers including Aviva, Legal & General and Scottish Widows, is tackling this issue head-on by:
- Developing consistent metrics to measure pension inequality
- Sharing best practices with employers
- Advocating for policy reforms, such as earlier auto-enrolment and improved childcare access
Laura Stewart-Smith, Head of Pension Engagement, at Aviva said: “Bringing men’s and women’s pension contributions closer together is slow progress and at the current rate it could be a quarter of a century before we see parity. Incoming auto-enrolment reforms will help to bring added momentum, and we would like the government to put a roadmap in place for how and when it will implement changes. These changes will need to be implemented gradually, and a clear roadmap would give employers and pension savers time to plan, which will help to ensure better retirements for millions of workers.”
Policy Recommendations
Experts agree that closing the gap demands structural change:
- Expand auto-enrolment to cover lower earners and part-time workers
- Improve access to affordable childcare
- Promote flexible working and shared parental leave
- Recognise unpaid caregiving in pension systems
What Employers Can Do Today
Employers play a critical role in bridging this gap. At Thomas Carroll Employee Benefits, we help businesses design tailored solutions to support women and ensure compliance. Practical steps include:
- Maintaining pension contributions during maternity leave (many payroll systems don’t do this automatically
- Encouraging employees to claim child benefit for NI credits
- Considering spousal pension contributions for non-working partners
- Using pension calculators to model the impact of increasing work hours or delaying retirement
Contact our Employee Benefits team to discuss how we can support you with pension education for employees and highlight the importance of contributing to a pension. Call us on 02920 853788 or email us at contact@thomas-carroll.co.uk
