Why do women retire with less money than men?

Shared Parental Leave (SPL) exists to split caring for little ones in the early days of their arrival. But despite the increase in prevalence of SPL being offered by employers, women still carry the burden of childcare. Among those who did not use SPL, around one in five women say that it was their decision to take the leave themselves. A further one in five say that either their partner didn’t want to take additional leave, or that their partner’s workplace was not supportive.

Menopause can amplify financial strain. Women aged 45-54 who are experiencing menopause and take career breaks face slightly greater financial challenges and are more likely to work longer than women of the same age who are not currently experiencing menopause.

Planning gaps also intensify the difference, where 40% of women did not plan financially in preparation for their career break and 55% found the loss of these earnings a struggle. These numbers emphasise the value of anticipating key life events and sustaining contributions where possible.

Divorce and financial planning

Divorce, however, changes the picture slightly. Women are often left with the sole ownership of the family home following a divorce, as they are more likely to stay with any children they have. Even if a couple stays together women can often still be left with the home due to their, on average, longer life expectancy. As a result, women can end up with significant property wealth.

Housing equity could play a major role in bridging the disparity in retirement savings for many. Equity release could supplement women’s retirement funds, releasing approximately one third of the value of their equity, an additional £100,000 which would almost close the £113,000 gender pension gap.

We recommend that pension pots are a part of divorce discussions, so that women understand what they are entitled to. Last year’s report stated that not discussing divorce could cost women up to £77,000 at retirement on average.

Do women invest differently from men?

Whilst women are just as likely to invest via a workplace pension, they are less likely than men to invest outside of pensions, often preferring to build up a savings buffer before committing to investments. For instance, 37% of men have a stocks and shares ISA compared to 26% of women.

Perception and confidence are very important. Many women (50%) say that they do not see investing as being ‘for them’, or that they would not invest regardless of the amount of savings they had. This is despite that fact that large numbers of women are already investors through workplace pensions.

Too often investing is portrayed as complicated, high risk and largely a male dominated activity. It’s a narrative keeps many women on the sidelines. Women like to ensure they have some savings in place before they start investing, but 31% of women don’t know how much they should have saved before investing, showing confusion about balancing savings and investments.

By changing how we talk about investing and making it feel relevant and accessible, we can close the perception gap alongside the pension gap and move decisively towards gender parity.

Women are less likely than men to actively manage their investments in retirement, yet they are just as likely to seek professional advice when making financial decisions. This suggests that many women prefer to be guided rather than give their own hands-on management; an insight which could shape how support is offered.

Digital tools can also help, however women are less likely to use digital planning tools. When it comes to long-term savings such as pensions 15% of women versus 21% of men use digital tools. But clearer guidance on trusted delivery would encourage greater use.

What can Scottish Widows, policymakers and industry do to close the gender pensions gap?

Closing the gap requires policy that builds confidence and widens access to timely support. A practical starting point is shifting perceptions of what it means to be an investor. Scottish Widows is centring the conversation on confidence, clarity and manageable steps, encouraging women to act early and keep going as their circumstances change.

Scottish Widows places practical confidence at the heart of closing the gap, ensuring women understand the choices available to them at each stage of planning. A pension is not something to defer to ‘future you’. Small, regular actions taken now can make a meaningful difference later. Preparing for tomorrow does not require sacrificing life today. It is possible to start modestly, even early in a career, while still working towards other goals such as buying a home or paying debt. As circumstances evolve, through career progression or changes in income, the plan can be adjusted and the approach reassessed.

To make this tangible, Scottish Widows has introduced tools like the Career Break Modeller within the Scottish Widdows app. A ‘what if?’ simulator that lets users explore how different choices today can impact their financial future. The app brings together savings, ISAs, pensions and property equity in one place, helping women understand the value of their assets and plan confidently for retirement.

Regulatory support matters too. Most women view the FCA’s new ‘Targeted Support’ framework as helpful, particularly younger women and those from ethnic minority groups as it sits between guidance and full advice and can be delivered through digital channels, having the potential to meet women where they are, in moments that matter.

Read the full report