Gender pension gap

Gender pension gap ( also known as the sex pension gap) is the percentage difference in pension income for women compared to men. [1] The gap averages at 26% across OECD countries[2]

Background

In the UK there are no official government assessment of the size of the pension gap and policies specifically to address it. Estimates suggest that the gap increased to 37.9% in 2019-20, which is more than twice the size of the gender pay gap (15.5%).[3] [4] Women in retirement have 72% lower pension income than men[5] The average pension pot of a woman in the UK at retirement (£10,000) is less than half that of a man (£21,000).[6][7]

The gender pension gap is linked to the gender pay gap because it is partially caused by cumulative impact over time of women earning less than men but is particularly disadvantageous because it starts to affects women in a way that they can take very little action to rectify. Although it is illegal to pay women unfairly there are many societal and structural conditions which enable the pay gap and pension gaps to remain and grow [1][6] The pension gap is particularly stark in areas of work which are traditionally female dominated.[6] The gap impacts single women (and single mothers) more than those who are married .[8]

European data ( for 27 EU countries) indicates that the sex pension gap is most marked in Luxembourg, where women received 44% less pension, followed by Malta and the Netherlands (both 40%),[9] Cyprus (39%), Austria (37%) and Germany (36%).[10] Japan has a gap of 50% and Canada’s gap is around 22%.[11]

Causes
  • imbalance in the level of pension saving.[12][13][14]
  • inequality in the average level of state pension awarded to men and women.[1]
  • impact of women taking career breaks from paid employment or reducing hours for caring responsibilities and part-time working[15]
  • indirect gender discrimination built into the pension system. Millions of women miss out on workplace pensions because they don’t qualify for auto enrolment into their scheme because they work in lowpaid, or several part-time jobs[5] [16]
  • differences in risk aversion, financial risk tolerance and financial literacy.[17]

Solutions

Juan Yermo, Chief of Staff to the OECD Secretary-General has said “Policy makers need to account for and address the factors that can lead to gender inequalities, and should strive to design gender-neutral retirement savings arrangements”.[2]

References
  1. Mar 2021, 18 (2021-03-18). "Five things every woman should know about the gender pension gap". www.aviva.co.uk. Retrieved 2021-10-23.CS1 maint: numeric names: authors list (link)
  2. "Governments need to address the gender gap in retirement savings arrangements - OECD". www.oecd.org. Retrieved 2021-11-04.
  3. "What is the gender pension gap?". Prospect. Retrieved 2021-10-23.
  4. "Covid widens gender pension gap by 17%". 11 August 2021.
  5. "Gender pensions gap". NOW: Pensions. Retrieved 2021-10-23.
  6. "British women hit by gender pension gap at every stage of career | Legal & General". group.legalandgeneral.com. Retrieved 2021-10-23.
  7. Palmer, Kate. "Pension gender gap is still too wide". ISSN 0140-0460. Retrieved 2021-10-23.
  8. Nast, Condé (2020-06-23). "We need to talk about pensions: why single women fall behind, and what to do about it". Glamour UK. Retrieved 2021-10-23.
  9. "Netherlands has second largest gender pension gap in EU". NL Times. Retrieved 2021-11-04.
  10. "Closing the gender pension gap?". ec.europa.eu. Retrieved 2021-11-04.
  11. "Gender pension gap can be addressed by higher minimum wage and removing barriers to unionization". USW Canada. Retrieved 2021-11-04.
  12. Crawford, Rowena; O'Brien, Laurence (2021-05-11). "Understanding the gender pension gap". ifs.org.uk. Retrieved 2021-10-23.
  13. "Gender pension gap: how women can boost their retirement pot". the Guardian. 2021-07-31. Retrieved 2021-10-23.
  14. O'Brien, Laurence; Crawford, Rowena. "Gender pension gap: why women save less - and why that's changing dramatically". The Conversation. Retrieved 2021-10-23.
  15. "The gender pension gap | International Women's Day 2021 | Scottish Widows". www.scottishwidows.co.uk. Retrieved 2021-10-23.
  16. O'Brien, Laurence; Crawford, Rowena. "Gender pension gap: why women save less - and why that's changing dramatically". The Conversation. Retrieved 2021-11-04.
  17. "2. Understanding the gender pension gap beyond labour market drivers through a literature review | Towards Improved Retirement Savings Outcomes for Women | OECD iLibrary". www.oecd-ilibrary.org. Retrieved 2021-11-04.
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