Women losing more than four months' retirement pay each year

The gender pensions gap means that retired women receive the equivalent of four and a half months less than men in pensions payments each year. Photo: Getty
The gender pensions gap means that retired women receive the equivalent of four and a half months less than men in pensions payments each year. Photo: Getty

Thursday marks "gender pensions gap day" — the day women pensioners in the UK effectively start getting paid once the gender pensions income gap is taken into account.

The gender pensions gap means that retired women receive the equivalent of four and a half months less than men in pensions payments each year.

The gap stands at 38%, more than twice the level of the gender pay gap which is currently 15.4%, according to figures from Prospect union.

In two-thirds of industries women have built up workplace pensions worth less than half as much as men, according to the new analysis published by the Trades Union Congress (TUC).

One of the main reasons for the disparity is the unequal division of caring responsibilities which mean women are much more likely to take time out of work or work part-time to look after children, making it harder to build up a workplace pension.

Gaps in pensions auto-enrolment that mean employers do not have to enrol low paid workers into a workplace pension also play a part as women are more likely to be in low paid jobs.

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The impact of the gender pay gap over time also contributes to the pensions gap as women earn less than men in general.

In manufacturing, wholesale and retail, and other service activities, women aged between 45 and 64 have less than a fifth (19%) of the pension wealth of male colleagues, according to new analysis of ONS figures commissioned by the TUC.

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.

Even in female dominated industries such as education and human health and social work, the median private pension wealth for women is less than half that of men, at 36% and 31% respectively.

London has the widest gender pensions gap in the UK at 75%. Women aged 45-64 in the capital have been able to accumulate an average of £12,600 in pension savings.

The TUC estimated that it could take 54 years to close the gender pensions income gap.

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The union body is calling on the government to take action to close the gap more rapidly by introducing mandatory action plans along with pay reporting and investing in childcare to make sure it is affordable and available for families in order to better lift the load of caring responsibilities off of women.

The TUC is also calling for the government to fix auto-enrolment so that it works for people in low-paid or part-time jobs by removing the £10,000 earnings threshold so that employers must put all workers into a workplace pension and getting rid of the lower earnings limit so that contributions are calculated from the first pound of earnings.

Ministers should also lay out a timetable to increase statutory minimum employer contributions from 3% so that all workers will benefit from better contributions and fix the net pay issue that means some low-paid workers don’t get tax relief on their pension contributions, the TUC said.

TUC general secretary Frances O’Grady said: “Too many women are paying the price in retirement for taking time out of work or cutting back their hours when their children were small.

“Ministers must act now, or we will consign more generations of women to poverty in retirement.

“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.

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“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.”

Prospect senior deputy general secretary and TUC president Sue Ferns said: “The first thing the government needs to do is acknowledge the problem and ask ONS to start benchmarking the gender pension gap so we can properly measure progress year-on-year.

“Changing the auto-enrolment rules could be done quite quickly and would be one way for the government to demonstrate support for working women.”

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