27 Oct 2025

8 ways to close gender, ethnicity and disability pensions pay gaps

Closing pension gaps created by gender, ethnicity and disability requires co-operation from the government, individuals, employers as well as pension schemes.

In 2024 the pensions pay gap between men (who on average have more pensions wealth) and women was 13.1%. This is an improvement on the 19.2% 10 years earlier in 2014.

Worryingly though, the gap between white British citizens and ethnic minority British citizens was 24.4% in 2018. Disabled people’s pension income currently reaches just 43% of the UK average. All of these groups intersect.

Clearly then, there’s still work to be done. So how can the various pension pay gaps be closed?

1. The government could lower the auto-enrolment threshold

Currently in the UK, your employer must enrol you into a pension savings scheme if you earn more than £10,000 a year. This excludes low earners that balance work around caring responsibilities (which is largely done by women and ethnic minorities) or are unable to work full time due to a disability, creating pension gaps.

Lowering the earning threshold (possibly to match the National Insurance threshold) would allow more workers to start earning a private pension, supplementing any state pension they may have and reducing pension gaps.

2. Individuals can claim child benefit

If parents don’t claim the child benefit they’re eligible for with children under 12, they won’t be eligible for National Insurance credits. These credits count towards an individual’s state pension. Without them, a non-working parent either won’t be recognised for, or will receive a reduced version of, the state pension.

Individuals can opt not to receive child benefit payments, but still receive the national insurance credits, and may wish to do this if their overall family total earnings are above the threshold where it would need to be paid back. Grandparents who care for a child under 12 while the parent returns to work can also have National insurance credits recognised.

3. Employers could increase employer pension contributions

There is clearly a challenge with cost-of-living increases and saving pensions and non pensions. However, other countries notably Australia step up contributions as employment service increases.

Auto-enrolment has been successful in the UK in terms of low opt out rates and we can use what is probably more inertia than tactical thinking for a high proportion of auto-enrolled members. For increased employer contributions this could be targeted at those on the lowest salaries.

Paying higher contributions into employee pensions (especially without making them pay in more than the statutory 3%) helps all employees, not just those affected by pension gaps.

Where it does help groups affected by pension gaps is by effectively lowering the number of hours they need to work to build up the same pension point compared to if the employer’s contributions had been lower.

Another element of this could include continuing to pay into employees’ pensions when they themselves can’t for affordability reasons.

4. Top up pensions during maternity leave

Another area worth considering is the impact of maternity leave on pension contributions. Time taken off work to care for children often results in reduced or paused payments into pension schemes.

Introducing a top-up mechanism to offset these gaps could help ensure individuals aren’t penalised in retirement for taking time out to raise families.

Access to advice and support at retirement will be important as there may be unintended consequences on pension at retirement and tax and benefit that may be receivable.

5. Pay employer contributions during carers leave

By law, UK employers will usually pay pension contributions during sick leave, something which is already helping to address pension gaps. But, when employees need to take carers leave, the employer continuing to pay pension contributions during said leave will have much the same effect.

With 10% of women and girls providing unpaid care in England and Wales in 2024 and over 500,000 women from an ethnic minority group are providing unpaid care, providing employer pension contributions during care leave would go a long way to closing pension gaps caused by gender and ethnicity.

6. Pension schemes could ensure members understand retirement provisions

Whilst auto-enrolment has solved a lot of issues, pension scheme trustee boards still have a duty to educate members on the benefits of joining (and then staying in) their pension schemes.

The tax benefits of paying into a pension means that members essentially get ‘free money’ by staying in the scheme and should be reminded of this regularly. This will help prevent the pension gaps created by long periods of non-contributions by employees.

As decumulation options increase too, keeping members engaged with their pension will also help make sure members keep paying into their pension and choose the options that will best suit their desired lifestyle in retirement too.

7. Create a good communications strategy

Pension scheme members should have access to trusted people to talk to whenever they need to raise a question about their pension. Pension schemes should include user friendly language and assistive technology should be available so that different languages or text to speech options can be applied to increase understanding.

As well as being available for standard pension queries, schemes should also be aware that members’ next of kin may be in contact about death in service benefits. This can be particularly key if the death in service benefits are not included with the pension scheme benefits to ensure these benefits are not missed.

8. Create a diverse trustee board

Trustee boards should represent everyone in their pension scheme, regardless of make-up. However, having a diverse trustee board that includes representatives from the groups most affected by pension gaps will help give pension schemes first-hand insight into how best to support members in similar situations.

The factors that create pension gaps are varied, but so are the solutions. As such, closing pension gaps for good will require work from the government, individuals, employers and pension schemes.