The shocking fact about women’s pensions that’s been exposed today

Wednesday 14 August is the Trades Union Congress (TUC) Gender Pensions Gap Day – when the average retired woman effectively stops receiving their pension because of the gender pensions gap. The pensions income gap between retired women and men is 37.9%, or £7,000 a year.

Meanwhile, the gender pay and pensions gaps are closely linked, says the TUC. There are many common drivers of both – such as women having to work part-time, lack of access to flexible working, and low pay disproportionately impacting women.

However, while tackling the gender pay gap would go some way to addressing the gender pensions gap, it would not close it completely.

Closing the care gap is key to closing the pensions gap. Introducing day one rights to parental leave and flexible working will also ensure that employers are enabling families to share caring responsibilities.

Caring: a major factor in the gender pensions gap

The TUC says that the amount of time women spend out of paid work because of caring responsibilities is one of the most significant contributing factors to the gender pensions gap.

New analysis published by the TUC shows that nearly 1.5 million women who are not in paid work are undertaking unpaid caring responsibilities:

• Women are nearly five times more likely than men to be out of work because of caring responsibilities.
• Black and brown women are 6.5 times more likely than men to be out of work for this reason.
• Women in 20s and 30s most likely to be undertaking unpaid care.

The research shows that women aged 25 to 34 are most likely to be undertaking unpaid care while not in paid work compared to men of the same age.

Around one in 11 (8.7%) women aged 25 to 29 – more than 190,000 women – is undertaking caring responsibilities while not in paid work – compared to less than one in 100 men the same age. And around one in 13 (7.9%) women aged 30 to 34 are caring while out of work, compared to less than one in 100 men the same age.

But at every age – from the very start right through to the end of their careers – women are more likely than men to be out of work because of caring commitments.

Other drivers of the gender pensions gap

The TUC says that alongside caring commitments, the other main drivers of the gender pensions income gap are:

• Gender pay gap: the impact, over time, of women earning less than men due to the gender pay gap.
• Auto-enrolment: gaps in pensions auto-enrolment that mean employers do not have to enroll many low paid and part-time workers into a workplace pension – and these are more likely to be women.
• State pension: historic differences in National Insurance have left women with lower state pensions on average.

TUC general secretary Paul Nowak said:

Far too many women are consigned to poverty in retirement. Everyone should have the chance to build up a pension, regardless of how much they earn.

Ministers must set out a plan for closing the gender pensions gap – and fix our pensions system so that all women can benefit from a decent income in retirement. Women leaving paid work and taking on caring responsibilities is a key driver of the gender pensions gap – and the gender pay gap more generally.

Women kept out of work for caring responsibilities should build up extra state pension to recognise the value of that work. Many women in work don’t get any sort of workplace pension at all because they don’t earn enough – often because of working part-time around caring commitments.

We also need to tackle the care gap and give greater support to those with caring responsibilities…

Women are often the ones expected to plug the gaps when our social care and childcare systems are not sufficient. Commitments to introducing a fair pay agreement in social care and reforming the childcare and early years sector will also help to tackle drivers of the pensions gap.

Labour must act

The TUC is calling on ministers to take urgent action to close the gender pensions gap.

The union body also wants the new government to set out a plan for closing the gender pensions gap including:

• Making auto-enrolment work better for people in low-paid or part-time jobs. This can be achieved by implementing measures in the 2023 Pensions (Extension of Auto-enrolment) to lower the age threshold at which employers must put workers into a pension scheme and remove the Lower Earnings Limit so that contributions are made from the first pound of earnings; and setting out a plan to remove the £10,000 earnings threshold that excludes low-paid workers from auto-enrolment.
• Fixing the staffing crises in social care and childcare.
• Ensuring universal, flexible, high-quality childcare is available to all.
• Building a route to providing extra state pension contributions for those whose unpaid caring responsibilities mean they cannot build up workplace retirement savings.

Featured image via Envato Elements