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Mind the gap

The pension gap must form an important part of the gender equality debate, writes Hannah Phillips.



There has been considerable public discussion about the gender pay gap for people who are currently working, but the gender gap in pension income is even more stark.

The Chartered Insurance Institute recently found that women have one fifth of men’s pension wealth and the Pension Policy Institute consider women to be ‘under-pensioned’ along with marginalised groups including people with disabilities and people from ethnic minority groups. Unfortunately, reports rarely present data on pension inequality in an intersectional way – further research could show if, for example, women of ethnic minorities are doubly disadvantaged.

Similar to the gender pay gap for those currently in work, the reasons for gendered inequality in pension income are complex and interrelated. First, women participate in the labour market less than men.

Many women take breaks from work and are likely to work part-time for some of their careers. As a means to increase women’s pension income, part of the 2011 pension reform was the requirement for employers to automatically enrol employees in a private pension scheme. However, this requirement was only for full-time employees and excludes the many women working part time.

Women are also more likely than men to have caring responsibilities which affects the ability to work. In 2017, research found that 41.1 per cent of women in the UK provide care on a daily basis compared to just 25.3 per cent of men. Women’s caring responsibilities means they may take time off from work or are siloed into less well paid “mummy track” careers, contributing to the pension gender pay gap. Moreover, the 2011 reforms do not require employers to make contributions for the full length of statutory maternity leave, impacting women’s pension income.

Finally, there is a pension pay gap because of gender segregation in the UK workforce. Lower paid jobs tend to have low pension income. The reality is that women are more likely to be in jobs that are less well paid than men, as recent gender pay gap reporting shows.

The segregation of the labour market, care provision and the pension policies are interdependent, so solutions to combat the gender pension pay gap must be holistic.

First off, pension reform is essential to combatting gendered pension inequality. A Labour government could extend the automatic pension enrolment to part-time employees and require pension contributions to cover the entirety of maternity leave. The pension requirement could also be required for paternity, adoption and other types of caring leave to ensure that those who have caring responsibilities are not systematically worse off in old age.

In order to reduce the pension pay gap, gendered inequality for those currently working must be addressed. For example, the requirement for gender pay gap reporting could be extended to businesses under 250 employees. One of the apparent successful rationales for pay gap reporting is that businesses are incentivised to employ more women in high earning roles. With more women in high earning and high pension accumulating roles, the pension gender pay gap would decrease.

Addressing care is another important part of working towards gender equality. A priority for the next Labour government should be improving public child care provision. The UK’s insufficient public childcare means that many women find that they are better off not working or working part-time. With better care provision, women could participate in the workforce more equally to men and so reduce the gender gap in pension income.

In addition, the Labour government should encourage men to engage in caring. Even though in the UK men are entitled to shared parental leave, only 2 per cent of those eligible use it. One effective way to increase men’s caring involvement is through “take it or leave it” paternity leave. Compared with other policy attempts like shared parental leave, earmarking leave for fathers which cannot be transferred to mothers has proven successful elsewhere in Europe in incentivising men to care for their children. This policy could also gradually reduce the social stigma to caregiving which would lessen the prevalence of “mummy track” careers.

Finally, the Labour government should increase care workers’ pay. As well as being overrepresented in unpaid care, women are more likely than men to be professional, notoriously underpaid, care workers. Feminist economists have long argued for the need to improve conditions for care workers for the benefit of the whole society that relies on the care workforce. The recent strike by Glasgow city council workers demonstrates that feminised work has been undervalued compared to typically masculine roles. Improving care workers’ pay conditions would lessen the pension pay gap and send a message about the importance of care work.

As the Labour party consider how the welfare state can meet the challenges of the 2020s and support everyone from cradle to grave, gender inequality – including the gender pension gap – must form an important part of the debate.

This blog is part of a series of reflections by Cohort 8 of the Fabian Women’s Network Mentoring Programme.

Hannah Phillips

Hannah Phillips is a public policy professional with a particular interest in gender. She currently works in the leader’s office at Lambeth Council.


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