This was a joint meeting with The-Pensions-Net-Work.
“Closing the Gender Pensions Gap”
Over 50 members and guests signed up for our latest panel discussion on a very topical subject. We were very fortunate to have an illustrious panel of Sharon Bellingham (Scottish Widows) Jo Cumbo (FT), Sophia Dimitriadis (International Longevity Centre) and Stephanie Payet (OECD) who were able to provide some diverse perspectives on the issues which was followed by a lively discussion with some excellent questions from the audience. All our meetings are held under Chatham House rule so no comments are attributed to individual speakers
Our first speaker set the scene by looking at the global context. She illustrated the gender gap in assets showing how it grew with age and she highlighted the labour market differences which affect women’s ability to save for retirement. She looked at some of the cultural and societal drivers such as risk aversion, marital status and gender stereotyping and described how women are disadvantaged by the design of retirement savings arrangements. She suggested seven steps that could be taken to reduce the gender pensions gap:
- Promoting women’s access
- Encouraging women’s participation
- Improving the level and frequency of women’s contributions
- adapting the design of pension arrangements to the career patterns of women
- improving the investment returns on women’s retirement savings
- increasing women’s own retirement benefit entitlements
- increasing the level of retirement income that women receive
Our second speaker then shared some of UK research into this subject. She illustrated that women are saving more but that pension inequalities between men and women persist. She described the structural inequality that women face which led to the difference in pension savings between a man and a woman on the median wage averaging a £100,000 over a 44 year career. She also drew attention to how the pandemic had worsened the position for some groups of women in certain industries, those that were self-employed, younger women, mothers and those in ethnic minorities. She ran through briefly three case studies and then concluded with some policy suggestions that would tackle some of the inequalities:
- Making the inclusion of pensions in divorce proceedings compulsory
- Enhancing maternity pension provisions
- A range of proposals for building on the success of automatic enrolment
Our third speaker looked at the retirement income prospects for women in generation X and showed how their retirement incomes have been affected by several socio-economic changes. She illustrated how this generation of women disproportionately struggle to save for retirement because of the extra burden of care responsibilities that they face and how this meant that many of these women are likely to earn below the auto-enrolment threshold. She also suggested that this generation are less confident and informed about retirement planning. She put forward four suggestions for what needs to be done:
- Make it easier for people to combine care (and health) needs with work
- Extending auto-enrolment to low earners but offer some flexibility
- Tweaking tax relief to support carers not in work
- Making information more accessible for both pension savings and living standards
Our last panellist provided some more general comments and made the point that she believes that women have suffered as a result of the move away from defined benefit schemes to defined contribution schemes which leads to the loss of the employer guarantee of the longevity risk which is greater for women and also the exposure to investment risk. She thought that CDC schemes might provide a solution for some women and believed that this needed more investigation. She also endorsed the suggestions regarding improvements to automatic enrolment.
Unsurprisingly the panellist’s comments led to many questions and contributions from the audience. There was an interesting observation that women are not necessarily more risk averse and that it is more of a communications and comprehension issue -and in many cases lack of time. There was a comment about annuities and that the vast majority are purchased by men and only around 25% are on a joint life basis. It was suggested that pension freedoms and more choice work against the interest of women.
There was concern that the Pensions Minister had recently confirmed that the reforms suggested by the 2017 review of auto-enrolment are on the agenda but not until the mid 2020s. There was also comment on the experience in Chile and Australia where early access during the pandemic had been allowed and then withdrawals were used for other reasons.
It was suggested that many of these issues are more related to employment than pensions. It was suggested that state pensions provide broadly the same outcomes for men and women and that the disparity arises in relation to work related pension rights so that fixing the employment issues would also fix the pensions issues. There was another suggestion that, in the absence of other measures to level the playing field earlier on in working life, women should receive a higher state pension than men. Would this be a way of placing a value on the non-profit generating support women offered to the economy through their roles as carers over the years which take them out of the workplace.
To close the meeting the Chair asked each panellist what one change would they make now if they had the chance. Summarising, the panellist’s responses were:
- Remove the lower income threshold for auto-engagement
- Increase the level of engagement of women on this issue
- Ensure that on divorce at any point all pension entitlements are shared
- Reform legislation so that care responsibilities do not detract from pension entitlements
It was a great and lively discussion which could have gone on for much longer. All four panellists contributed to what was probably one of the best virtual meetings that we have staged over the last year. The issues raised are significant and span all age ranges. it would seem as though there are many possible solutions some of which are complex and could be expensive for the government to implement. However, from the discussion it was clear that the audience felt we cannot afford to sweep these issues under the carpet and that there were steps that could and should be taken now to head off a worsening situation affecting growing numbers of women across the generations.