Today is International Women’s Day – and if you have women in your life you’d love to celebrate, now is the time to do it. If you are a woman, you might use today to take stock of your achievements as well as continue to strive for women’s equality all over the world. 

In the world of finance, women have progressed a long way in the last 50 years. It was only in 1974 that the first women were allowed to trade on the London Stock Exchange, let alone become financial professionals in other fields – but in 2024, we have countless financial opportunities at our fingertips. 

Although the progress is notable, there are still inequalities that hold many women back. At the centre of UK financial inequality is the gender pay gap, which according to the Office for National Statistics (ONS), stood at 7.7% in April 2023.

So, keep reading to find out the factors that contribute to the gender pay gap, how it could affect women long-term, and why financial planning could help to close it.

2 factors that contribute to the gender pay gap in 2025

You could be wondering: “If women have the same opportunities to earn money as men, and paying a woman less than a man for the same role is against the law, why is there still a gender pay gap?”

Here are two factors you may not have considered that continue to reinforce the pay gap.

1. Taking a career break to have children

According to research compiled by TotalJobs, career breaks are a significant contributor towards the gender pay gap. Despite women often performing better academically than their male peers, this is not often reflected in their long-term remuneration if they decide to have children and take time off work to do so.

As a result of the “motherhood penalty”, research shows that between October and December 2021, three times as many women worked part-time as men. Seeing as part-time workers have median hourly earnings of less than £10, compared to full-time workers who have median hourly earnings of £14.31, these combined elements contribute to a drop in the average woman’s income nationwide. 

2. The “glass ceiling” 

Women still make up only a small proportion of top-paying positions in the UK, bringing the average woman’s earnings down compared to a man with similar education. This is often known as the “glass ceiling” – invisible from a legal standpoint, but experienced by women all over the world.

2022 research by the Chartered Management Institute (CMI) found that fewer than half (41%) of management roles were occupied by women, falling to 38% when examining the number of women in senior business leadership positions. 

2 ways the gender pay gap could affect women’s long-term financial viability

It is clear that the gender pay gap affects women’s day-to-day lives, but many people do not consider how this gap could affect their long-term stability too.

Let’s take a closer look at two ways this could happen.

1. Women may retire with less in their pensions than men

There have been several studies that prove the “gender pensions gap” is still a problem for women. The NOW: Pensions gender pensions gap report for 2024 found that today, women retire with an average of £69,000 in their pensions, compared to their male peers who retire with £205,000 on average. 

Of course, the gender pay gap directly correlates to this disparity in pension wealth: if you earn less as a woman, your pension contributions are likely to be lower too. And, if you take a career break for family reasons, you may not be paying into a pension for several years. 

Having little pension wealth could mean that women need to retire later, or live with a lower quality of life after work.

2. Women could be entitled to less in State Pension payments

In order to be eligible for the full new State Pension, which is rising to £221.20 a week in April 2024, you need 35 “qualifying years” on your National Insurance record. These qualifying years are those in which you have made sufficient National Insurance contributions (NICs) or received National Insurance credits for a variety of reasons, including if you are raising children in most cases.

As a woman, it is important to ensure your National Insurance record is correct, and that you have maximised your NICs or credits where possible.

Financial planning could help to empower women who are affected by the gender pay gap

If you are a woman who feels disheartened by the gender pay gap, you are not alone.

While it can be hard to make up the shortfall created by a systemic issue like the gender pay gap, working with an independent financial planner could be of serious benefit to you. A financial planner will first discuss your life goals with you, and then use this information to build a financial plan that puts these objectives at the centre of the conversation. 

What’s more, working with a financial planner who understands your needs as a woman is important. I am an independent financial planner who, as a busy mum myself, understands the importance of planning ahead and making your money work harder for you.

To learn more about how women can get ahead with financial planning, email me on a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. 

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.