Gender Pay Gap vs. Pension Gap Across Europe: Why Inequality Gets Worse in Retirement?
Gender pay gap vs pension gap across – In the European Union, the disparity in earnings between men and women remains a persistent issue. Women consistently earn less than their male counterparts, with a gender pay gap of 11.1% in 2024. However, this gap does not end when individuals retire; instead, it intensifies in the realm of pensions. The gender pension gap, which measures the difference in retirement incomes, is notably greater than the pay gap. On average, female pensioners in the EU receive 24.5% less than male pensioners, a figure more than double that of the pay gap. This raises a critical question: what causes the pension gap to be so significantly larger than the pay gap?
Comparative Analysis Across Europe
Eurostat data reveals that the gender pay gap varies considerably across the 30 European countries surveyed in 2024. The smallest gap is observed in Luxembourg, where women earn 0.8% less than men, while Estonia records the highest at 18.8%. Countries such as Belgium, Romania, and Poland report the lowest gaps, with figures of 0.7%, 3.7%, and 4%, respectively. Conversely, Czechia, Austria, and Hungary have the largest pay gaps, at 18.5%, 17.6%, and 16.9%. The United Kingdom, Germany, France, Spain, and Italy also show notable disparities, with gaps of 13.3%, 11.8%, 7.3%, and 5.3%, respectively.
While the pay gap remains consistent across many nations, the pension gap tells a different story. In the EU, the average pension disparity is 24.5%, surpassing the pay gap by nearly 13 percentage points. This suggests that the cumulative effect of wage differences and other labor market factors over time significantly impacts retirement income. For instance, in Luxembourg, the gender pension gap is 32.7%, despite the pay gap being just -0.8%. This highlights the complex interplay between current earnings and long-term financial outcomes.
Factors Behind the Pension Gap
“It’s not necessarily pension-system features in the Nordic countries, but also better availability of child care and different gender roles leading to more equal distribution of care work,” said Professor Alexandra Niessen-Ruenzi from the University of Mannheim.
According to Niessen-Ruenzi, the pension gap is influenced by more than just the structure of pension systems. It is also shaped by broader societal patterns, such as childcare accessibility and the division of domestic responsibilities. These factors contribute to more equitable wage distributions in Nordic nations, where the gender pay gap is largely below the EU average. However, the pension gap in these countries is not entirely due to systemic policies alone—it reflects a combination of workplace practices and cultural norms.
Dr. Ariane Agunsoye from Goldsmiths, University of London, emphasized that the pension gap often outpaces the pay gap because it accumulates inequality over decades. “Small differences in earnings, hours worked, career breaks, caring responsibilities, saving patterns, and investment decisions build up over time and become most visible at retirement,” she explained. This means that the pension gap is not merely a reflection of current wage disparities but a result of historical trends and cumulative effects in the labor market.
Another contributing factor is the disparity in employment hours. Women in Europe are more likely to work part-time, which reduces their total earnings over a lifetime. This pattern is consistent across many countries, with significant variations in how it manifests. For example, in Estonia, the gender pension gap is 5.6%, while the pay gap is 18.8%. In contrast, Malta reports a pension gap of 38.2%, which is the highest among the surveyed nations. The gap in the UK, Netherlands, Austria, and Belgium also exceeds 30%, indicating a stark divide in retirement incomes.
Professor Iris Kesternich from the University of Hamburg pointed to three key drivers of the pension gap: gender wage gaps, differences in working hours, and variations in contribution years. Women often take career breaks to care for children, which can lead to fewer years of pension contributions. Additionally, the tendency for women to work part-time or in lower-paying roles contributes to the disparity. These factors, combined with the compounding effect of compound interest over time, amplify the pension gap as individuals age.
Professor Liam Foster from the University of Sheffield added that the characteristics causing the pay gap do not simply carry over into retirement—they are magnified. He noted that pensions are based on compound interest, meaning a small earnings gap in a person’s early career can grow exponentially by the time they reach retirement age. This dynamic underscores the long-term consequences of gender inequality in the workforce.
Regional Variations and Policy Implications
Among Europe’s five largest economies, the pension gap consistently exceeds the EU average. The UK leads with a 37% gap, followed by Spain (29.2%) and Italy (28.6%). France and Germany, while slightly below the EU average at 27.2% and 25.8%, still report substantial disparities. In contrast, Germany has the smallest difference between the pension and pay gaps among the top five economies, at 10.2 percentage points, largely due to its higher pay gap compared to other nations.
The pension gap also varies significantly between regions. Eastern European countries, such as Estonia and Hungary, have lower pension gaps than their pay gaps. Niessen-Ruenzi explained that this is partly because women in these countries often return to work quickly after childbirth, which helps maintain their contribution histories. However, this does not fully account for the gap in Western European nations, where structural and cultural factors play a more pronounced role.
When comparing the pension gap to the pay gap, the difference is most pronounced in Luxembourg, where the pension gap is 33.5 percentage points higher than the pay gap. This is followed by Malta, Belgium, the Netherlands, and the UK, which also show gaps exceeding 30 percentage points. Countries like Italy, Ireland, Spain, and France have differences surpassing 15 percentage points, highlighting the uneven impact of gender inequality across Europe.
The implications of these disparities are far-reaching. As women retire, they face not only a smaller pension than men but also a reduced ability to maintain their standard of living. This creates a cycle of inequality that persists well beyond employment. Addressing the pension gap requires a multifaceted approach, including policies that support work-life balance, equal pay initiatives, and long-term financial planning for all workers.
