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Jeremy Wong

The Gender Pension Gap

Pensions remain one of the key battlegrounds in the fight for equality. Growing older may be something we prefer not to think about, particularly if we are worried about the state of our finances and how we can survive on a pension. But one thing that cannot be avoided is that poverty blights the lives of many of today’s older women. It limits what they can afford to do and isolates them socially. Little wonder then that around two thirds of all pensioners living in poverty are women.

Although men and women are equal in employment law, it is still much harder for women to obtain a decent pension. Many women have working lives that are interrupted by periods of full and part time family caring. At any point in time, roughly a third of working age women work full time, a third part time and a third are not in paid employment. Thus women, particularly those that raise a family, are less likely than men to have a full time continuous employment record. They also continue to earn less per hour than their male counterparts. 

Despite more than 30 years of equal pay legislation, there is still a marked gap between men’s and women’s earnings. Women workers clearly suffer from generally having lower wages (and therefore lower pension contributions), breaks in National Insurance or pension contributions due to caring responsibilities or insecure/part-time employment. The reality is that if you are low paid, you will have a poor pension in retirement.

On average, pensioner women receive 25% less state pension than men, including many of those who before 1977, paid the Married Women’s Stamp (which didn’t entitle them to a state pension). In November 2017, the average weekly amount of state pension received by women was £126.45 per week, compared to £153.99 for men.

Among those aged over 65, 71% of men but only 43% of women received any private/occupational pension, and the median amount from these pensions is 53% that of men’s.  

Women in their 60s also have a fraction of the pension savings that men have. According to the Chartered Insurance Institute, the average 65-year-old woman has £35,800 in her pension pot, compared with £179,000 for the average 65-year-old man.

The gender pension gap is bigger than the gender pay gap: women in the UK receive 39.5% less in pension income than men – twice as large as the difference in pay between the sexes. This equates to an average shortfall of £7,000 a year.  

We also need to be clear that the blame for the fiasco surrounding the changes to women’s state pension age lies with Sir Steve Webb, who was the Coalition government’s pensions’ minister. The decision in the Pension Act 2011 to accelerate the rise from 60 to 65 over an eight year period, rather than a ten year period, has caused real problems for hundreds of thousands of women, and there is no question that they should be compensated.

The UK is one of very few countries in the world which has already legislated for a state pension age of 68 for men and women. The Cridland report has even recommended bringing that forward by 7 years to 2038, so that anyone now under the age of 45 will be affected. Working people are effectively being told to work longer, pay more and get less.

However, the evidence shows that life expectancy in certain parts of the country is now falling, and overall longevity has stalled for the first time in 100 years. We also see a huge rise in the numbers of people who cannot even work up to state pension age because of illness, difficulties in finding a job in later life or caring responsibilities; the higher the state pension age goes, the more likely the number of people falling into this category will increase. There ought to be options for people to receive Pension Credit up to five years before state pension age or receive their state pension earlier.

All women, both now and in the future, need a decent state pension that takes them out of poverty, set at 70% of the Real Living Wage – currently around £220 a week. It is not acceptable that women are condemned to less comfortable retirements and greater anxiety about finances because of inherent unfairness in the labour market and structural problems in the pension system.

By Neil Duncan-Jordan, National Pensioners Convention (NPC).