The Gender Pension Gap

 

The gender pension gap refers to the disproportion in retirement savings and pensions between men and women. While retirement income should ideally reflect an individual's earnings throughout their working life, women often find themselves at a disadvantage due to various factors. 

 

1. Earnings Disparities: One of the primary reasons behind the gender pension gap is the gender pay gap. Women, on average, earn less than men over their lifetimes, primarily due to the types of occupation, discrimination, and the undervaluation of work traditionally performed by women. It’s a positive sign that over the past decade, the UK’s gender pay gap has been in decline. In April 2023 it stood at 14.3% when looking at all employees. Among full-time employees it’s much lower at just 7.7%. This difference may reflect the fact that women fill more part-time jobs which, in comparison with full-time roles, have lower median pay (Office of National Statistics). 

2. Career Interruptions: Women are more likely to take time off work or reduce their hours to care for children, elderly parents, or family members with disabilities. These career interruptions can significantly impact their ability to save for retirement, as they may miss out on promotions, pay raises, and employer contributions to pension schemes. 

3. Part-time Work: Women are more likely than men to work part-time, often to balance work and caregiving responsibilities. While part-time work offers flexibility, it typically comes with lower wages and reduced access to employer-sponsored pension plans. 

4. Longer Life Expectancy: Women tend to live longer than men, which means they require retirement savings to last longer. However, their lower pension savings combined with longer life expectancy can lead to financial strain in later years. 

5. Divorce: Divorced women are more likely to feel like they do not earn enough to save (64%) compared to divorced men (54%). This could be down to lower earnings, not having the support of their husband’s pension later in life leading to increased chance of poverty in retirement. (Royal London, Tackling the gender pension and wealth gap, October 2023). 

6. Financial Confidence: A recent survey by Royal London in October 2023, found that married heterosexual women are less confident with making decisions on long term investments, preferring to run the everyday living expenses instead. The research also showed that less women possessed their Level 2 Maths than men. This general lack of understanding creates a barrier to accessing important financial products and services. 

 

 

To tackle the gender pension gap and promote gender equality in retirement, concerted efforts are needed from policymakers, employers, and individuals alike. 

 

1. Equal Pay and Opportunities: Closing the gender pay gap and promoting equal opportunities for women in the workforce are crucial steps towards reducing the gender pension gap. This includes addressing pay discrimination, promoting women's career progression, and encouraging women to enter higher-paying fields. 

2. Flexible Work Arrangements: Employers should offer flexible work arrangements, such as remote work and job-sharing, to accommodate employees' caregiving responsibilities without penalizing them financially. 

3. Improving Pension Access: Governments and employers should work towards improving women's access to employer-sponsored pension schemes, especially for those working part-time or in non-traditional employment arrangements. 

4. Financial Education and Planning: Empowering women with financial literacy and retirement planning tools can help them make informed decisions about saving earlier in life and investing for retirement. 

5. Divorce: Empowering women to speak up during legal discussions on financial separation. The role a woman plays in care giving reduces her pension which enables her husband to continue working and this imbalance should be addressed when separations are being negotiated. 

 

The gender pension gap represents a significant barrier to gender equality and financial security in retirement. By addressing the root causes of this inequality and implementing targeted solutions, we can work towards bridging the gap and ensuring that women have the resources they need to enjoy a dignified and comfortable retirement. It's time to level the playing field and create a future where retirement security is a reality for all, regardless of gender.