We talk a lot about closing the gender pay gap. We talk less about what happens after that pay reaches your pension, and that’s arguably the bigger problem. According to the Women’s Budget Group, the UK’s leading feminist economics think tank, the overall gender wealth gap in Great Britain stands at 21%, but the gender pension gap specifically is far higher, at 43%, with men holding on average nearly £67,000 more in pension wealth than women.
Career breaks, part-time work, and lower average pay all play their part. But there’s a second, quieter factor that has nothing to do with your career choices at all: which pension fund you happened to get placed into.
The choice made for you
Auto-enrolment means most working women in the UK have a pension without ever having sat down and picked one. What actually happens behind the scenes is simpler than it sounds: your employer selects a provider, that provider defaults everyone into a particular fund, and unless you specifically requested otherwise, your contributions have been sitting in that fund the whole time, for better or worse.
The scale of “for better or worse” is bigger than most people realise. Corporate Adviser’s independent comparison of UK default pension funds found a 232% return for the strongest performer over the past 10 years, against just 88% for the weakest. Picture two women, same job title, same pay, same length of service, ending up with completely different retirement pots. Not because either one saved more carefully or invested more cleverly, but because of an administrative decision made on their behalf that they were never consulted on.
Among the funds in that comparison, TPT Retirement Solutions landed in the third spot. Its DC Director, Philip Smith, offered a way of thinking about the gap that’s worth holding onto: “For a long time, scale and low cost have carried a built-in assumption of safety. Big feels credible. Cheap feels efficient. Both are easy to defend. But member outcomes are what matter, and outcomes like these are a reminder that size and price do not, on their own, define value.”
Why this could hit women harder
This isn’t a gender-specific finding; the performance gap applies to every saver in a given default fund, regardless of who they are. Whether it works for or against you is down to which fund you happen to be in, not your gender. But it’s worth understanding against a backdrop that already works against women: a pension pot that’s likely to be smaller than a male colleague’s to begin with, purely because of the gender pay gap and career breaks, has less room to absorb the effect of also landing in an underperforming fund.
That’s worth sitting with, because it’s a part of the story that gets far less airtime than the headline pay gap figures. The Women’s Budget Group’s own analysis found that the majority of men’s wealth comes from their pensions specifically, while the majority of women’s wealth tends to come from jointly-owned assets rather than anything held in their own name. Which fund your pension actually sits in isn’t a footnote to that story. It’s one of the few levers you can actually check for yourself.
Three things you can actually check
None of this means panicking or assuming your own pension is underperforming. It means knowing enough to ask the right questions:
– Find your annual pension statement.
It shows how your fund has performed over time, not just how much has gone in. Most providers also have an online account where you can check this without waiting for the paper version to arrive.
– Ask which fund you’re actually in.
Your HR or payroll team can point you to your provider, and your provider can tell you the specific fund name. It’s a completely normal question to ask, and one very few people ever do.
– If in doubt, ask a financial adviser to look at it with you.
They can help you understand what your fund’s performance actually means in context, and whether switching funds, where that’s an option, is worth considering.
Closing the pay gap matters. So does making sure the money you have earned is actually working as hard for you as it should be, in a fund you’d have chosen for yourself, if anyone had ever asked.
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