What happens to your pension during a career break?

• The current gender pension gap in the UK
   
• How career breaks impact your pension

The gender pension gap is the difference in average pension income between men and women. In 2020, the average pension gender gap was 31.4% globally and 38% in the UK. 

Looking at data from the World Economic Forum and the OECD, it exists in almost all retirement systems in the world and is an even bigger challenge than the stubborn gender pay gap.

Various research and reports point to the fact that women across the globe retire with significantly less money than men while having longer life expectancy. In fact the gender pension gap is a bigger challenge than the gender pay gap.

Visit the OECD website to learn more about the efforts to close the gender pension gap.

One reason for the pension gap is that women joined the workforce much later than men.

In the workplace, factors which might impact your pension can include: 

• The impact of career breaks (which women, on average, are more likely to take)
   
• The indirect impact of gender discrimination, which might see men promoted to senior - and therefore higher-paying - roles more often than women

For example, a study by Qualtrics and theBoardlist found that during Covid-19, 34% of men working remotely with children at home said that they had received a promotion, compared to just 9% of women in the same situation

Women are more likely to take career breaks to care for children, relatives or other dependents. While your pension contributions continue during your statutory maternity leave, many women choose to take longer. 

If you're claiming child benefits for any child under 12 and aren't a working parent, you will still get 'pension points'. Collecting these points means your National Insurance contributions into your state pension will keep going, even if you are not working and not paying into National Insurance.

However, we know the state pension is meagre and hardly enough to live on from earlier lessons. Having a private or employee pension you can still make any contributions to, no matter how small, will positively impact the amount in your pension pot when you need it.

Career breaks will have an impact on you pension.

There are other reasons beyond career breaks that may cause you to pause your pension. For example, if you are planning to invest in property, you may want to maximise your savings towards this for a short time. 

The keyword here is short. A slight pause in your pension is something you can resolve, but it becomes financially challenging to fill in the gaps as soon as it becomes a medium or long-term break.