More than a third (36%) of women face poverty in retirement as a result of career breaks, according to Scottish Widows’ latest research.
The Women and Retirement Report 2025 found that more than half (58%) of women at or near retirement have taken a career break, compared to just 12% of men, and women are 12 times more likely to take a break in order to raise children, leading to a loss of income and gaps in their pension contributions.
By age 55, a quarter (24%) of women have been out of work for more than five years, which could result in a £70,000 loss in retirement.
As an example, Scottish Widows said women taking a five-year career break at 35 years old would reach age 67 with a pension worth £512,000. This is £69,380 less than women who don’t take a break in their career.
While women manage their money slightly better than men during career breaks, they are less likely to plan for them financially, the data shows. Two fifths (40%) of women didn’t plan financially for their career break and 56% never considered the impact it would have on their retirement. As many as 42% of women found that the break in their career reduced their ability to save, compared to 37% of men.
Scottish Widows has calculated the median total private pension for women at retirement at £173,000 versus £286,000 for men. That means the gender pension gap between women and men is now £113,000, an increase on last year’s £100,000.
Susan Hope, retirement expert at Scottish Widows, said: “Millions of women in the UK are living with the gender pension gap and they don’t even know it. To achieve true equality in retirement, we need to make sure career breaks don’t break women’s future financial security.
“There are a couple of straight-forward ways to help address these gender pension concerns. We need to improve awareness and take-up of shared parental leave policies.
“Separately, spouses should be actively saving into women’s pensions during any career breaks, if possible. This is also known as third party contributions and, while often overlooked, is a helpful financial planning tool. Not only can it maximise tax relief for those who have used up their allowance, this can help to plug gaps in pension contributions while earning power is limited.”
Hope said employers also continue to play an important role in pension contributions during maternity leave, with employer contributions in a workplace scheme often calculated based on their pre-leave salary.
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