The gender pension gap has risen to a "stark" 48%, figures from the Department for Work and Pensions (DWP) have revealed.

The data, shared alongside the news that the government was 'reviving' the Pensions Commission to address undersaving concerns, estimated that the median uncrystallised wealth of those aged 55 to 59 in 2020 to 2022 was £81,000 for women and £156,000 for men.

The gender pension gap varied by age, as the DWP found that it was smallest for those aged 25 to 29 (22%) before increasing to 52% for those aged 45 to 49.

This pattern is similar to the trajectory of the gender pay gap, which shows a relatively small gap until the age of 40 when it gets larger due to different labour market trajectories of men and women.

However, the DWP said that it is also important to note the impact auto-enrolment has had on private pension saving, pointing out that while both male and female individuals in their twenties and thirties may have benefited from being automatically enrolled into saving for the most of their working life, this is less likely to be the case for older workers.

For instance, it pointed out that whilst 62% of those eligible and aged 40 to 49 were participating in a workplace pension in 2012, 88% of this group are now participating.

There was also a difference by scheme type, as the gender pensions gap was smallest when considering private pension wealth held by individuals with only defined benefit (DB) compared to individuals with only defined contribution (DC) wealth or both DB and DC wealth.

Focusing on those aged 55 to 59, the gender pensions gap was smallest for those who hold DB pension wealth only (39%), and largest for those holding only DC pension wealth (75%). For those with both DB and DC pension wealth the gender pension gap is 52%.

The DWP suggested that the gender pensions gap is driven by a number of factors, noting that there are key differences in labour market experiences among men and women.

In particular, it noted that the employment rate among women is lower, and they are more likely to be in part time work, work less hours, and earn less throughout their career.

And lower earnings can impact pension savings in a number of ways, as the DWP pointed out that not only do lower earnings mean less is likely saved into pensions, but it may also make an individual ineligible for auto-enrolment and therefore less likely to be participating in workplace saving.

Indeed, the analysis revealed that only 35% of ineligible employees are saving into a workplace pension compared to 88% of those eligible and thus automatically opted in.

In addition to this, separate analysis shared today revealed that around 2.5 million private sector employees in 2023 earned less than £10,000 a year, and, of these, only around one in four were saving into a workplace pension.

However, the DWP found that while women are more likely to work part time, AE eligible part time women (84%) are more likely than AE-eligible part-time men (71%) to save into a workplace pension.

It also pointed out that auto-enrolment has significantly increased the number of people saving into a workplace pension, revealing that, as of 2023, 5.2 million more AE-eligible men and 4.9 million more AE-eligible women paid into a workplace pension compared to 2012.

However, DWP said that whilst auto-enrolment has been a particular benefit to lower earners, resulting in more low paid women having a private pension, it admitted that it also means greater numbers of women may have small pension pots, which drives down the average pension wealth relative to men, increasing the gender pensions gap.

Indeed, further analysis shared today also revealed that whilst auto-enrolment has brought in a significant number of new savers, the average contribution rate as a percentage of total pay for those saving was lower in 2023 than before auto-enrolment was rolled out in 2012.

However, the government said that it is "committed" to both monitoring and narrowing the gender pensions gap, pointing out that some progress has already been made.

In particular, it said that auto-enrolment has equalised workplace pension participation rates between eligible men and women in the private sector and has significantly expanded the number of women saving into a workplace pension.

In addition to this, it said it is important to note the introduction of the flat-rate new state pension in 2016 has reduced the gap in state pension payments men and women receive.

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