Two women retire on the same day in two different countries. They each worked just as hard as the other, raised families, paid taxes and did everything that was asked of them. One will retire comfortably with security and independence. The other will have to count every pound.
The difference between them is not talent, not effort, not even pay discrimination. It is childcare.
The UK has the second largest gender pensions gap in the Organisation for Economic Co-operation and Development group of 38 developed economies. Women in the UK retire with a pension that is an average of 37 per cent smaller than men’s. This is a slow-burn inequality that leaves millions of women poorer in retirement. Yet one small country has shown that this gap is not inevitable.
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Since 2007 Slovenia has recorded one of the most dramatic falls in the gender pensions gap, and now has one of the smallest in the developed world at about 10 per cent. Researchers have predicted that by 2050 the imbalance will have been pretty much eliminated altogether. Slovenia’s secret is not a radically different pension system. Much of it comes down to childcare.
It gives each parent 160 days of paid parental leave on top of maternity and paternity leave, making it easier to share childcare equally. It heavily subsidises preschool, with parents paying between 10 per cent and 80 per cent of the true cost on a sliding scale. If siblings attend at the same time, the younger child goes free. Most families get some kind of child benefit — further helping to reduce the pressure of childcare costs.
Slovenia is one of just nine OECD countries that give pension credits for having children or provide pension bonuses to parents whether they took a career break or not. This supports mothers without disincentivising work.
The result of all this is that Slovenian mothers are far more likely to remain in work and return full-time, protecting their long-term pension records.
These lessons matter in the UK, where the pensions divide is driven less by pay discrimination than by the motherhood penalty. British women are far more likely to work reduced hours, leading to lower pension contributions, or none at all if they fall below the auto-enrolment threshold.
The lesson is clear: if we are serious about closing the pensions gap we must start decades earlier, with affordable childcare and better, more equal parental leave.
I am by no means saying that Slovenia is perfect. There are areas where it falls down: for example, there is limited support for women taking time out to care for elderly relatives.
There are plenty of other countries that offer valuable lessons in how to close the gender pensions gap — Sweden’s “use it or lose it” parental leave for fathers, which encourages men to take a greater share of childcare, is a case in point.
We should remember that the UK is different to many European countries because in retirement we mostly rely on private pensions, the state pension merely providing a top-up. Our state pension system does a reasonable job of compensating women for childcare career breaks with credits: it’s private pensions where the gap really emerges. In other places, including Slovenia, state pensions are the bedrock of people’s retirement plans. Yet the country remains a useful case study.
What women can do to improve their pension
For most women, knowing the root of the problem is no magical solution. Childcare still has to be paid for. Careers still stall. And retirement can feel too far away to prioritise when nursery fees are due. But there are practical steps you can take to soften the long-term damage.
First, protect your pension record during career breaks. In the UK you can get national insurance credits for your state pension record by claiming child benefit. It’s important to do so even if you opt out of the payments because you earn enough that you will have to pay some of it back through your tax return. Many women miss out simply because they do not register, which means they could be forgoing thousands in state pension income later.
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Second, check whether you fall below the auto-enrolment earnings threshold. If you earn less than £10,000 a year with one employer you are not automatically enrolled into a workplace pension but you can still opt in. Even small contributions matter over decades, particularly if your employer then has to contribute too.
Third, consider keeping a foothold in paid work where possible. Slovenia’s experience shows how this can protect long-term earnings and pension savings. It won’t be possible for everyone, but even a few extra hours a week can make a dramatic difference later.
Fourth, talk about pensions as a household issue, not an individual one. Childcare choices often benefit the family as a whole, but the pension penalty falls disproportionately on mothers. If one parent is working full-time, they can pay into the pension of another parent on reduced hours or not working at all, helping to rebalance the scales.
Finally, check your pension regularly. Many women accumulate multiple small pots from part-time jobs. Keeping track of them — and consolidating where appropriate — can prevent money from being lost or forgotten.
None of this replaces the need for genuine structural reform. Slovenia’s lesson is not that women should try harder. It’s that, when childcare is affordable and leave is shared more equally, women do not have to choose between having children and securing their future.
Marianna Hunt is a personal finance specialist at the investment firm Fidelity International