Four Ways Retirement Plans Can Reduce the Gender Savings Gap

Four Ways Retirement Plans Can Reduce the Gender Savings Gap

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This insight is part 12 of 12 in this Collection.

September 27, 2023 13 mins

Four Ways Retirement Plans Can Reduce the Gender Savings Gap

Four Ways Retirement Plans Can Reduce the Gender Savings Gap Hero image

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. Inequity between men and women in retirement savings stems from more than just a pay gap — and it has significant negative business and societal impacts.
  2. Rising regulatory pressures are driving companies to conduct annual pay equity audits and the same should be done for retirement savings.
  3. Education and targeted communications are important, but employers can do more to ensure benefit programs are accessible, affordable, flexible and consistent.

Attention to a gender pay gap has grown tremendously over the years, with new legislation across Australia, Canada, Europe, Japan and the United States. A new EU directive on the gender pay gap now adds employer pensions to the discussion. As a result, we are seeing more employers now taking a keen interest in addressing gaps that exist within their employee benefits and retirement savings.

Women aged 65 or older receive around 74 percent of the retirement income of men on average.This disparity is statistically significant in virtually every retirement system in the world. To add to this, from a practical standpoint, women live longer on average than men, making the need for more savings to compensate even greater.

The Negative Impacts of the Gender Savings Gap

While the gender savings gap clearly affects people on an individual level, it also has broader societal implications. Each woman who is forced to get a second job in retirement, for example, cannot commit that time to other important causes like helping contribute to her family or society through local or national philanthropy.

On the business front, there are many negative impacts caused by the retirement gender pay gap and resulting poor financial wellbeing, including:

  • DE&I initiatives: Having a gender retirement savings gap doesn’t align with broader organizational diversity, equity and inclusion (DE&I) priorities. Therefore, attracting and retaining a desired workforce becomes even more difficult, especially for goals around increasing gender diversity for leadership roles.
  • Retention: Compelling benefits help reduce turnover. Four in 10 employees say retirement benefits are a key reason they stay with an employer.2
  • Health and wellbeing: Money worries impact health. In fact, finances are shown to negatively impact the mental health of 43 percent of women compared to 32 percent of men.3
  • Workforce performance: Delayed retirement can be expensive and create workforce issues. Sixty-eight percent of women are concerned they will not be able to retire when they want to versus 53 percent of men.3

Driving Factors Behind the Gap

The gender retirement savings gap stems from many causes, the main one being that women generally earn less than men over their career. But the reasons for this are multidimensional.

First, women are more likely to have non-traditional working patterns and retirement plan design often favors traditional career paths. Breaks in full-time work are often due to the increased likelihood of women caring for children and elderly parents. Indeed, women do unpaid work at least 2.5 times more than men, according to the International Labour Organization.

Second, women make investment and retirement saving decisions differently and have more barriers to saving than men. For example, 78 percent of female employees in the UK have not set a goal for how much they need to save to retire compared to 68 percent of males, according to Aon’s DC pension and financial wellbeing employee research 2021. That can be partly due to a decline in financial confidence: A Fidelity survey found women are suffering a decline in financial confidence at more than double the rate of men.4

Third, women live longer on average than men and need more retirement savings, which makes the retirement savings gap even more concerning. Women retiring at age 67 are expected to outlive men by two years. This means that women need about 10 percent more savings to achieve the same standard of living in retirement as men, according to Aon’s 2018 Real Deal Retirement Income Adequacy Study.


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

Source: Aon’s 2018 Real Deal Retirement Income Adequacy Study

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As in other parts of the world, the pension gap in Latin America is closely linked to the gender pay gap. While progress has been made, companies in the region must continue to prioritize better conditions for their diverse workforce.

Patricia Barra
Head of Wealth Solutions, Latin America

Narrowing the Gender Retirement Savings Gap

To successfully make positive change, companies first need to acknowledge the reality of the gender savings gap in retirement. For most, educating employees is a key first step followed by targeted communications to those most at risk. It’s important to always consider reviewing representation of decision makers to ensure it is reflective of the workforce and have targeted communications for key life stages and financial wellbeing education. For example, identify how much to contribute to get back on track after maternity leave or offer timely reminders to maximize tax advantages (e.g., voluntary tax-efficient top-ups each tax year).

Then, develop retirement benefits that are affordable, accessible, flexible and consistent. It’s not always about spending more, but rather, a reallocation of how firms spend benefit dollars.

Here are some tips for rolling out the principles of an affordable, accessible, flexible and consistent retirement plan.

  • Affordable: Provide a minimum level of retirement benefits that is not contingent on employee savings. Consider a high match on first savings (up to a cap) or a flat amount of benefits to funnel more savings to lower-paid employees.
  • Accessible: Make plans more accessible by shortening eligibility and vesting periods, extending benefits to part-time employees, and providing benefits during caregiver leaves or catch-up contributions.
  • Flexible: Shared parental leave and other flexible working opportunities all contribute to gender equity, making it easier for employees to save. Flexibility also enables broader financial wellbeing support to meet employees where they are — for example, access to emergency savings, student loan payments and life planning accounts.
  • Consistent: Avoid different benefit structures for different populations, helping to eliminate bias in plan design. Employers can review access to and equity of spousal benefits, facilitate lifetime income and move away from service-based benefits where possible. Use data to ensure no inequities are unintentionally created in the process.

Additional action to close the gender savings gap is taking place at the legislative level in many countries, with the passing of several measures and more likely on the horizon. Examples of this include the requirement for employers to pay retirement contributions while on parental leave or give parents a “pension contribution baby bonus,” which could be partially or fully rebated by the government.

Even further, an Australian firm developed a comprehensive package of employee benefits including the novel idea of paying an additional 2 percent retirement plan superannuation contribution for female staff. Mindful of anti-discrimination laws, they approached the Human Rights Commission for a ruling. The Commission ruled that the action was a special measure designed to achieve substantial equity between men and women. Since then, other organizations have developed female-friendly retirement policies.

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Taking these types of steps ensures alignment with equity goals, encourages women to take breaks from the workforce if they need to, accounts for differences in female longevity, helps retain female staff and positions a company as a market leader.

Ashley Palmer
Head of Wealth Solutions, Asia Pacific

Analyzing the Gap to Determine Key Actions

We recently analyzed a client’s gender pensions gap in the UK. Results indicated that a key driver of this gap was the disparity in contribution rates between men and women. To help navigate this challenge, we recommended the following actions:

  1. Target communications to the low earner population to educate them on the benefits of contributing to pensions.
  2. Reconsider the company’s contribution structure to remove potential barriers impacting low earners.

By following these steps, the client was able to take targeted and meaningful action to help close the gender pay gap in retirement planning.

Identify the Driving Factors to Determine Next Steps

Before thinking long-term, companies must first acknowledge and address existing gender savings gap issues. Determine what factors are driving these challenges to target the most effective next steps. There are many actions to take. Tools like Aon’s Global Gender Pensions Gap Analysis can help you to understand which ones are best suited for each employer’s situation will pave the way for a more equal and secure retirement future.

Employers need to be vigilant and constantly look at how other factors influence retirement savings gaps. In the process, organizations will also secure a global retirement plan that supports the bigger picture — including business objectives and best practices around DE&I. Aon’s Global DE&I Retirement Dashboard can help provide a high-level indication of how global retirement plans incorporate DE&I behaviors within their plan design, investment funds, employee communications and plan operations.

And lastly, remember to always be bold and purposeful as this issue truly matters. Consider setting a corporate target to reach equality in employee retirement savings by a set date. It will serve as a powerful step within your employer value proposition and opportunity to be a change leader in closing the gender savings gap.

For more information on how we help clients address their retirement needs, please visit our page on Aon’s Pensions and Retirement capabilities.

Aon's Thought Leaders
  • Melissa Elbert
    Partner, Wealth Solutions, North America
  • Karina Klimaszewski
    Partner, Wealth Solutions, United Kingdom
  • Ashley Palmer
    Head of Wealth Solutions, Asia Pacific
  • Jacintha van Bijnen
    Strategic Pension Advisor, Wealth Solutions, Europe
  • Patricia Barra
    Head of Wealth Solutions, Latin America

1 Assessing the gender gap in retirement savings arrangements | Towards Improved Retirement Savings Outcomes for Women | OECD iLibrary (
2 MetLife Employee Benefit Trends Study and Human Interest, and Financial Finesse research on ROI, 2017
3 Aon’s 2021 Employee Financial Wellbeing and Defined Contribution Survey data based on answers from approximately 1,000 full-time U.S. workers with access to an employer-provided retirement plan. Responses are relatively evenly split between females and males.
4 Data according to a survey of 2,000 adults by Opinium for Fidelity

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