Women face ‘whopping pension gap’, says TUC

It’s been calculated that the income gap between men and women in retirement is now 38%, which is more than twice the level of the gender pay gap (currently 15.4%).

This gender pensions gap means that women retired in the UK effectively go for four and a half months each year without getting a pension, Prospect union has found.

As such today (Thursday 19 May) marks ‘gender pensions gap day’, as this is the day women will start getting paid.

Analysis from the Trades Union Congress (TUC) to coincide with ‘gender pensions gap day’ shows that in two-thirds of industries women have built up workplace pensions worth less than half as much as their male colleagues.

For example, in sectors such as 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 co-workers.

Elsewhere, women in administration and support services on average have built up almost no pension wealth and have a pension pot a hundred times smaller than the average man in the same industry.

According to the trade body, there are several reasons why there is an gender gap, including caring responsibilities, low-paid workers not being auto-enrolled, the gender pay gap meaning women are earning less and differences in National Insurance, which mean women have lower state pensions on average.

There are noticeable region gender pension gaps too, as women aged between 45 and 64 in London have been able to build up the lowest amount of pension wealth (£12,600 on average) where the gender pension gap is largest (75%).

Meanwhile women in the south east (67%) and east of England (65%) also have much larger pension income gaps on average.

Frances O’Grady, general secretary for the TUC, explained that the “whopping pension gap” women are facing could take more than 50 years to close.

“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,” she explained.

“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.”

She added that investments in childcare are vital as caring responsibilities are one of the key drivers to causing the pension gap.

“Making childcare cheaper is a vital part of our economic recovery and essential for enabling mums stay in work,” O’Grady added.

Taking action

For change to happen, the TUC is calling on the government to:

• Introduce a statutory requirement for ministers to report on the gender pension gap.
• Fix auto-enrolment so that it works for people in low-paid or part-time jobs.
• Invest in childcare.

The latest news regards the pension bill will be discussed at the Payroll & Reward Conference this June. Get your ticket here.