Pension Gender Gap Decreases – but it’s not Good News
The gender gap in pay and pensions in the UK has been the focus of campaigners for many years. This year the gap in the pension expectations of men and women has finally begun to close, according to a report released by the Prudential. However, it seems that there is little to celebrate for equality campaigners, or anybody else, as the figures suggest that the closing gap represents the falling pension expectations of male workers and not a rise in pension income predictions for women. The report takes into account retirement income from all sources for those now working aged 45. The results demonstrate that the average pension for women is now only £5,750 below their male counterparts. This represents a twenty three per cent drop on the gap from last year’s figures when the gap was measured at £7,400. However the gradual levelling of pension expectations is not a sign that equality measures have begun to take an impact.
Pension expectations have, in the past, been lower for women for a number of reasons. In many cases a woman would qualify for a lower rate of state pension due to her lower National Insurance contributions. This lack of contributions generally represented gaps in their careers due to care duties. The largest career breaks usually being those taken to raise a family. This in itself has an impact on longer term expectations as it slowed their climb up the ranks within any industry. Care duties can also impact at another significant time in women’s lives – the later years prior to retirement. Caring for elderly relatives can often mean that a career can be cut short in turn meaning vital final workplace contributions are lost. This situation has been alleviated in recent years by legislation, but a gap continues to exist.
For men the decrease in the gender gap is not good news as it largely reflects the overall drop in pension income. Men, who still have generally have larger pension pots, have seen the value of those pots decreasing rapidly. With interest rates at an all-time low, the problem for male workers over the age of 45, according to the survey, is simply that their existing provision will struggle to provide an income of £18,000. This amount matches exactly the figure that is considered to provide an “adequate” income in retirement. Adequate is good, but it’s not great
We’re all in trouble
The Prudential report also highlights some wide variations across the UK in the gap between male and female pension expectations. The regions demonstrating the highest gap are the South East of England and Scotland, with £7,870 and £7,510 respectively. The factors creating these high rates of discrepancy may, however, differ. In Scotland a high percentage of women remain in part time employment (41 per cent) compared to other parts of the UK, while in the South East, high salaries in male dominated jobs in the city contribute to the level of inequality. In terms of pension income outlook, the North East and North West have the lowest gender difference, with figures £2,932 and £2,545. Again, this equality may not be great news as both regions are regularly found amongst the lowest salary statistics in the UK.
Although the gender gap in pension provision should be good news for women it seems that it is the result of a rapid drop in pension value across the workforce, rather than a levelling of pension income. Women still lag behind men in terms of achieving the “adequate” level of income during retirement, while men are gradually joining them. For those now in work and over 45, paying close attention to your pension provision should be a priority.
Written by The Spy, 12 June, 2012 - 18:09