Strategies for Closing the Gender Retirement Pay Gap

Strategies for Closing the Gender Retirement Pay Gap
February 18, 2026 6 mins

Strategies for Closing the Gender Retirement Pay Gap

Mature women discuss retirement savings in office setting

Addressing the retirement pay gap issue between men and women starts with first acknowledging it exists. Then companies can conduct further analysis and adjust their benefit plans accordingly.

Key Takeaways
  1. The gender wealth gap influences when employees can retire; in turn, this impacts employee engagement, retention, productivity and performance.
  2. Regular retirement savings audits help uncover problematic benefit and talent structures that can lead to a retirement pay gap. These audits can be done at the same time as annual pay equity audits.
  3. Effective retirement plans prioritize affordability, accessibility, flexibility and consistency.

Pay equity and transparency are receiving increasing regulatory attention across all regions of the world. One of the larger pieces of regulation, the EU Pay Transparency Directive, requires companies to consider the equity of their pensions, along with other benefits. These regulations and the broader movement are prompting more employers to examine their overall retirement benefits.  

There is good reason to take a closer look at any gaps across retirement savings. Women in every European Union and Organisation for Economic Co-operation and Development (OECD) country receive lower average retirement income than men.1 And since women live longer on average than men, they generally need more savings.  

Business Costs of the Retirement Gap 

The gender retirement pay gap can affect companies’ talent strategy in four primary ways: 

  • Engagement: A savings gap can signal deeper issues, such as employees who aren’t empowered to own their career or don’t feel like they belong.  
  • Retention: Nearly 75% of employees say benefits are important in attracting them to their job, according to Aon’s 2025 Employee Sentiment Study.  
  • Health and Wellbeing: Financially stressed employees lose 8.1 hours of productivity per week, and financial stress affects 43% of women compared to 32% of men.2 
  • Workforce Performance: Delayed retirement can be expensive and create workforce issues. One study found women need to work an extra 19 years to match men’s pension savings.3  

What Drives the Gap? 

There are several root causes for why women may retire with less savings than men — and they’re important to understand to develop a human capital strategy that supports all employees.  

  1. Women earn less than men. The gender wage gap was 69% in 2025 (i.e., women earned 69 cents on the dollar compared to men), according to the World Economic Forum Global Gender Gap Report. This was a 0.4 percentage point improvement from 2024.  
  2. Women hold fewer roles in leadership positions. Leveraging Aon’s workforce data, we find women comprise 33% of senior leadership roles globally at financial services firms (a 2% increase over two years), 44% of senior roles at life sciences firms (a 1% increase over two years) and only 30% of senior roles at technology firms (a 1% increase over two years). 
  3. Women are more likely to take career breaks. Many women take career breaks for caregiving. Studies show they perform 2.5 times more unpaid work than men on average.4 Traditional retirement plans assume unbroken careers, thereby penalizing these breaks. 
  4. Women have lower financial confidence. Women face more barriers to saving and make different investment decisions. Their financial confidence is declining at double the rate of men.5 
  5. Women live longer. Women retiring at 67 outlive men by two years.6 They need 10% more savings for the same retirement standard.7 

 

25%

A five-year break in service can reduce retirement savings by 25 percent.

Source: Aon research

Employer Actions to Close the Gap 

 

The first step to take meaningful action to boost retirement readiness for all employees, including women, is to acknowledge the gender retirement gap exists. The next step is to empower and educate employees, which includes targeting communications to at-risk groups. Finally, design retirement benefits around the following principles:

4 Benefits to Smarter Retirement Planning

  • 01
    Affordable

    Provide minimum benefits not contingent on employee savings. Consider high match rates on first dollars saved (up to a cap) to funnel more to lower-paid employees.

  • 02
    Accessible

    Shorten eligibility and vesting periods. Extend benefits to part-time employees. Provide benefits during caregiver leaves and catch-up contributions.

  • 03
    Flexible

    Offer shared parental leave and flexible work. Enable emergency savings, student loan payments and life planning accounts.

  • 04
    Consistent

    Avoid different benefit structures for different populations. Move away from service-based benefits and use data to catch unintended inequities.

Case Study

How an Australian Employer Addresses the Retirement Gap

An Australian firm pays an additional 2% retirement plan contribution for female staff. They approached the Human Rights Commission to ensure compliance, and it was ruled a valid measure to achieve gender equity. Other organizations in the country have followed suit with similar policies. “Taking these types of steps encourages women to take breaks from the workforce if they need to. It also accounts for differences in female longevity, helps retain female staff and positions a company as a market leader,” says Ashley Palmer, Head of Aon’s Wealth Solutions in Asia Pacific.

Get Started

The Bottom Line

Bridging the retirement savings gap requires a comprehensive approach that combines policy changes with targeted employee support — and it starts here: 

  1. Analyze your retirement gap along with your pay gap. Identify the driving factors within your organization. This will lay the groundwork for compliance with certain pay equity and pay transparency regulations. 
  2. Target communications to employees at risk of under-saving. Educate low earners and younger workers on their retirement benefits. Offer timely reminders to maximize tax advantages.  
  3. Review the structure and design of retirement plans to remove potential barriers for certain segments of the employee population, such as those with caregiving duties that may require a work break or reduced hours.  
  4. Set clear and achievable goals with accountability. Consider committing to measuring and reducing the retirement savings gap by a specific date.  
Aon’s Thought Leaders
  • Melissa Elbert
    Partner, Wealth Solutions, North America
  • Fleur Iannazzo
    Associate Partner, Wealth Solutions, United Kingdom
  • Karina Klimaszewski
    Partner, Wealth Solutions, United Kingdom
  • Ashley Palmer
    Regional Head of Wealth Solutions, Asia Pacific
  • Jacintha van Bijnen
    Strategic Pension Advisor, Wealth Solutions, Europe

1 Gender gaps in paid and unpaid work persist, OECD, 2025
2 Navigating Financial Stress: Empowering Employees, Forbes
3 Tackling the gender pensions gap - the road to financial equality in retirement, NOW: pensions, 2024, Institute and Faculty of Actuaries
4 Women at Work: Trends 2016, International Labour Organization
5 2024 Women and Money study, survey of 2,000 adults by Opinium, Fidelity International
6 Employee Benefits Security Administration, U.S. Department of Labor
7 Aon research

 

 

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

Terms of Use

The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.

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