Dr Hayley James has uncovered something fascinating about how we think about pensions.
During our Wednesday Wisdom webinar, she shared research showing that young people delay pension saving until they hit certain life milestones – buying a house, having a child, or simply feeling like they’ve properly grown up.
The cost of waiting until 35? Around £300,000 less in your pension pot.
What motherhood really costs
One of Hayley’s most striking findings relates to the financial impact of parenthood on women’s pensions. Six months of maternity leave can reduce a pension pot by £30,000, whilst taking five years out for childcare can mean £100,000 less in retirement savings.
But the numbers only tell part of the story. Mothers in Hayley’s study often actively chose to opt out of pension saving before their children went to school. They’d work out their take-home pay after pension contributions and compare it to nursery fees, and pensions would lose out. These calculations typically happened in isolation, with little discussion between partners about the long-term impact.
Interestingly, fathers in the study took the opposite approach, often increasing their pension contributions after having children as part of “providing for the family.”
Different approaches, different outcomes
Even when men and women save the same percentage of their salary, Hayley found they think about pensions in fundamentally different ways. Men tend to view their workplace pension as one investment option among many, often running personal pensions and other investments alongside. Some even opt out of workplace schemes believing they can achieve better returns elsewhere.
Women, however, typically see their workplace pension as their primary – often only – provision for retirement. As one participant put it: “My pension is the centre and everything else hangs off that.”
Practical solutions we could implement now
Hayley highlighted several approaches that could help address these disparities. One surprising option already exists: partners can pay into each other’s pensions, though few providers make this process straightforward or well-publicised.
More broadly, she advocates moving from ‘gender-neutral’ to ‘gender-friendly’ pension communications. This might mean putting parental leave information prominently on pension websites, or sending targeted messages when members experience major life events like buying property or returning from parental leave.
As Hayley memorably put it: “Women aren’t poor men.” They’re not simply men with less money, but people with different life experiences that our current pension system doesn’t adequately recognise.
Watch the full Wednesday Wisdom session below to hear Hayley’s complete findings, including her thoughts on why addressing the housing crisis might be more important than simply encouraging higher contribution rates.
