One key factor is the gender pension gap, exacerbated by women stepping back from the workforce to raise children or care for family members. These breaks often result in reduced contributions to workplace pensions, stalling the compounding growth critical for retirement savings.
Because women’s earnings are, on average, lower than men’s, their workplace pensions often grow more slowly. And women are more likely to earn below the £10,000 annual threshold required for automatic enrolment into a workplace pension scheme, leaving them without employer contributions and further widening the pension gap.
For couples, this imbalance often goes unaddressed, with many failing to share pension contributions during these caregiving years. Without proactive planning, women risk entering retirement with significantly smaller pension pots.
It’s crucial for partners to discuss fair financial contributions, particularly during life transitions like parenthood. Paying into a non-working partner’s pension is one practical solution, with tax-efficient contributions up to £3,600 annually currently allowed. However, awareness and uptake of this practice remain low. These conversations may be uncomfortable, especially as they acknowledge the possibility of relationship breakdowns, but they are essential for long-term financial security.
Beyond pensions, investment behaviour also highlights the gender wealth gap. Women are less likely to invest in higher-risk assets like stocks, often favouring cash ISAs with lower returns. This cautious approach reflects societal attitudes that portray investing as a male domain, coupled with the financial insecurity caused by lower earnings. Yet, investing early — even in small amounts — can harness compounding returns, significantly boosting wealth over time.
The gender wealth gap is not inevitable. By promoting early financial planning, shared contributions, and cultural shifts in attitudes towards investing, we can work towards greater equity. Women deserve financial equality and independence throughout their lives, not just equality in earnings.
Said Maggie Taylor, founder of This is LUMIN: “There is an opportunity to reframe wealth-building for women and bridge this gap, but that will only happen with greater awareness of the divide and with support and education designed to encourage women to take control and find investment routes that suit them. The research suggests there may be a degree of risk-aversion, but as with many of these gender divides, if the present system isn’t serving women well, we need to consider ‘why not?’.
“Sometimes a different approach can make the shift that’s needed. Maybe, by creating an environment where there are routes to investment that can be aligned with a personal sense of purpose, or by providing deeper levels of understanding before committing, women may be enabled to better build for their futures.”
She added: “At Lumin, this is one of the critical issues we’re exploring, and we are discussing practical ways to address the gender wealth gap with our founding advisor Vanesa Pazos, co-founder of NoBa Capital, alongside others who are actively working to build change.”
Author
On 12 December 2024 Lumin welcomes guest speaker Vanesa Pazos, a champion of women-focused investment opportunities, through her #EmpowerHer community. Her work underscores the potential of collective knowledge and shared financial goals to help women close the wealth gap.
- Reserve your space at this event, which is taking place at the Royal Society of Arts in London, by registering here
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Bridging the gender wealth gap: the hidden costs of inequality
The gender pay gap is widely discussed, but its ripple effects extend into a less visible but equally troubling issue: the gender wealth gap. This disparity in savings, investments, and pensions grows over a lifetime, leaving women financially disadvantaged in retirement. By their mid-sixties, men will have accumulated, on average, 42% more wealth than women of the same age. Addressing this gap requires early intervention and a shift in financial habits and societal norms.