Disrupted work patterns lead to lower pension savings, DWP finds

The Department for Work and Pensions (DWP) published a report showing that people with long periods out of work, self-employment, or part-time jobs risk building up little or no private pension over their working life. 

It showed that women, especially from ethnic minorities and those who report being disabled, are more likely to have lower private pension savings due to these patterns. 

Additionally, the report found that people who worked full-time throughout their lives had much higher retirement incomes than women who took breaks from paid work to raise children.

It also showed that including partners’ incomes makes the gaps smaller, but divorce, separation, or bereavement can leave people, especially women, with fewer resources in later life.

Life events like having a child, relationship breakdown or changing housing tenure had limited impact on pension participation for those who stayed in private sector employment, but affected pension savings when they changed working patterns and earnings. 

The report also found that men and women’s pension savings diverged after the birth of a first child, mainly because of changes in work and earnings.

Kelly Parsons, head of DC proposition at Broadstone, said: “The DWP’s research highlights the growing challenge around pension adequacy in the UK and the extent to which retirement outcomes are still heavily shaped by people’s working lives. 

“The report shows that people with more disrupted employment patterns, lower earnings and caring responsibilities are significantly more likely to face poorer retirement incomes, with women particularly exposed to these risks.