Action needed to address gender pensions gap

New analysis by the TUC to mark gender pensions day shows the need for urgent action to address the prospect of women being in poverty in old age.

pensions, saving for retirement

 

The gender pensions income gap in the UK means that retired women effectively go for four and a half months each year without getting a pension, making today (Thursday) ‘gender pensions gap day’ – the day women pensioners start getting paid, according to the TUC.

It says Prospect union has calculated that the income gap between men and women in retirement is now 38%, more than twice the level of the gender pay gap (currently 15.4%). The TUC states that  this disparity has the same effect as making women wait 38% of the year (139 days) before they get their pension.

Its analysis, which comes after a workingwise.co.uk survey highlighted the impact of the gap on women’s ability to retire or be independent in old age, shows that in two-thirds of industries women have built up workplace pensions worth less than half as much as men. The main drivers of the gap are the unequal division of caring responsibilities,  gaps in pensions auto-enrolment that mean employers do not have to enrol low paid workers into a workplace pension, the gender pay gap and historic differences in National Insurance that have left women with lower state pensions on average.

It looks at the gender pension gap in different industries. In manufacturing, wholesale and retail, and other service activities, it says women aged between 45 and 64 have less than a fifth (19%) of the pension wealth of male colleagues. And in administration and support services the average woman in this age group has built up almost no pension wealth at all and has a pension pot a hundred times smaller than the average man in this industry.

In 10 out of the 15 industries for which the ONS has reliable figures, including those dominated by women, median private pension wealth for women is less than half that of men (36% and 31% respectively).

The analysis also shows that the extent of the gender gap varies by region.

  • London is the region where women aged 45-64 have been able to build up the lowest amount of pension wealth (£12,600 on average) and where the gender pensions gap is largest (75%).
  • And women in the south east (67%) and the east of England (65%) also have much larger pensions income gaps than average.

TUC General Secretary Frances O’Grady said: “We need to fix our pension system so that all women can benefit from a workplace pension with decent contributions from their employer, regardless of how much they earn.

“And we must invest in childcare. Caring responsibilities are one of the key drivers of the pensions gap – and the gender pay gap. Making childcare cheaper is a vital part of our economic recovery and essential for enabling mums stay in work.”

Since Prospect started calculating the gender pension gap in 2015-16 it has reduced by just 2.8 percentage points, and if progress continues at this rate, the TUC says it could take another 54 years to close completely.

The TUC is calling for action on the gender pay gap, investment in childcare, a statutory requirement for ministers to report on the gender pension gap with an action plan on how to tackle the gap and action on auto-enrolment, such as removing the £10,000 earnings threshold, scrapping the lower earnings limit, fixing the net pay issue that means some low-paid workers don’t get tax relief on their pension contributions; and setting out a timetable to increase statutory minimum employer contributions from 3% so that all workers will benefit from decent contributions.

 



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