Number of high-earning women jumps 12% – how to convert income into pensions

The number of women making up the ranks of the UK’s highest earners jumped last year to nearly 300,000 – the trick is to build this into pension saving and investing where they still lag behind men. High-earning women in the UK – those making more than £125,000 a year and paying the top rate of income tax – rose in number to a record high of 284,000 in the year to March 31 2025. This is up 12% from 254,000 the year before, according to exclusive data obtained from HMRC for the Bowmore Wealth Group. Women now make up 26% of top-rate taxpayers, up from 25% last year and 24% in the year before that. The top or ‘additional’ rate of income tax is 45%, applied to individuals earning more than £125,140 a year. The fresh-high of women who are top earners pointed to more women reaching senior positions in professions such as law and financial services. Record numbers of women now sit on FTSE 350 company boards, for example – with 43% of board roles now taken by women. Gill Millen, managing director at Bowmore Financial Planning, said: “It’s encouraging to see a record number of higher-earning women. Growing female representation in senior roles is showing up clearly in higher incomes.” If you're a high earner – or about to become one – you may fall into the 60% tax trap. But what is it and how can you avoid it? Female millionaires lagging behind Women are not joining the ranks of millionaires as quickly, however. While the number of male million-pound plus earners rose by 9% in the last year to 2,500, the number of women remained flat at 400, meaning women now make up just 14% of this group – down from 15% the previous year. Millen said: “Unfortunately, the progress made with more women getting into the top tax bracket doesn’t seem to be reflected at the very top end with those earning a million pounds or more per year.” “That suggests issues still exist when it comes to women accessing the highest-paid leadership roles and the distribution of shares in those businesses.” “Change is happening though and with more women reaching the highest tax bracket, the need for smart, well-informed investing becomes increasingly important. This will enable them to retire comfortably later in life and pass on wealth to their family.” How much women need to pay into their pension Women on average need to be higher earners to even come close to bridging the common gap in their pensions and investments, according to new research. Women aged 45 already face a £52,000 pension wealth gap – with average pension savings of £48,000 compared to £100,000 for men, according to government statistics. They would need to earn £74,000 per year from age 45 onwards to achieve the same pension wealth as men by retirement, analysis from Interactive Investor, an investment platform found – double the average salary of £35,000. This analysis assumes both groups contribute 8% of their earnings (3% employer contributions and 5% employee contributions) – known as the 8% pension rule – until age 68 with 5% investment growth. Because women are on average starting from a much lower base in terms of pension savings, they must contribute £495 per month (8% of £74,000) from age 45 to achieve retirement pension wealth of £450,000 by age 68. In contrast, men need to contribute £233 (8% of £35,000) to achieve the same. The lower women’s earnings, the bigger the pension gap. Women who earn the average £35,000 salary face a £160,000 shortfall by retirement – with an expected pension pot worth £290,000, compared to £450,000 for a man, even when both earn £35,000 from age 45 and reach age 45 with an average-sized pension. There are multiple factors at play which are well documented; women are more likely to have time out of the workplace or work part-time during their thirties and forties to care for family – and this translates to smaller pension values and more financial stress in later life. Camilla Esmund, interactive investor, said: “Our thirties and forties can be a significant time for us in terms of our earnings, but it can also be a time of competing financial priorities. As it stands, average pension differences begin to snowball once women hit their thirties and become more pronounced when they hit midlife.” Three ways to close the pension gap – depending on your stage of life While the data doesn’t make for encouraging reading, not all is lost. By taking some simple steps as soon as possible, women can take control of their financial futures and narrow the gender pensions gap. Option 1 - Starting early (ages 22-45) - increasing contributions in your 20s and 30s is a great way to enter your forties with no gender pension gap. To reach age 45 with no pension gap at all, the average woman would need to contribute an extra £85 per month between ages 22 to 45. Option 2 - Catch up later (ages 45-68) - if you’re already 45 with a £52,000 pension wealth gap, you’ll need to contribute an extra £262 per month to close the full £160,000 gap by retirement age. Option 3 - Steady contributions throughout (ages 22-68) – contributing an extra £57 per month across your entire working life bridges the £160,000 gap by retirement. How to boost your pension There are a number of ways to boost your pension savings. 1. Top up your personal contributions if you can, making the most of tax relief “The minimum amounts under auto enrolment often aren’t enough for a comfortable retirement, especially if you hope to take time out of the workplace to focus on bringing up your family. This is something to think about, and to plan for early, if you can,” said Esmund Pension contributions receive tax relief at your marginal rate, meaning every £50 payment effectively costs £40 for a basic-rate taxpayer, £30 if you’re in the 40% tax bracket, and £25 if you’re in the 45% tax bracket. 2. Maximise your employer’s contributions Some workplaces will contribute more to your pension if you increase your own contributions, and this could make a huge impact over time. For example, if you contribute £50 more per month to your pension for ten years from age 25, this could swell to £42,000 by retirement, assuming 5% investment growth. 3. Check your maternity pension contributions “Employers are supposed to pay into your pension based on your pay before maternity leave, but recent analysis by Sky showed that some firms are reducing their contributions in an accidental error,” said Esmund. 4. Mind your fees “Another easy win is to check how much you’re paying in pension fees. This isn’t always easy to see, but you could be paying more than necessary, which can eat away at your savings over time,” Esmund said.