A shameful difference in pension entitlements between men and women was highlighted in our recent survey on fairness in pensions.
The survey also showed inequality between generations. The final category in the unholy trinity of unfair pensions was a divide between defined benefit pensions in the public sector and far less generous defined contribution pensions in the private sector.
I had not realised quite how big the gender gap remains in UK pensions until I researched the figures
I freely confess that I had not realised quite how big the gender gap remains in UK pensions until I researched the figures. The actuary in me had always taken refuge in the facts that women historically had lower retirement ages, lived longer and received the same pension accrual as a man on the same wage for each year of service.
I did not worry too much about the lower pay of women, maternity breaks – and increasingly other care that falls predominantly and unfairly on women – the relative prevalence of part-time work due to family responsibilities, or the lack of any occupational pension provision at all in some female-dominated industries.
DC removes women’s only advantage
The continuing move to DC provision removes one of the few inherent benefits of the current system for women, with their extra longevity now being funded directly from their own pots. I also suspect that the inadequacy of minimum contributions puts more onus on voluntary saving, which is naturally harder for those on lower incomes.
Hopefully this may be partly offset by the female tendency to save more than men with a similar disposable income. Equally, I am optimistic that the auto-enrolment review will start to address the limited access to pensions for part-time workers and the segment of the self-employed universe filled by workers seeking flexibility (even if on lower pay).
Hollis: Bring invisible women into AE system
The UK’s pension system is failing “invisible women” who do not meet the auto-enrolment earnings threshold and are punished for leaving work to care for children, Labour peer Patricia Hollis warned in February this year.
The average pension for a woman (£14,300 per year) is much lower than for men (£20,700 per year) research by Prudential shows. Only 40 per cent of women expect an adequate retirement income, and more than 20 per cent retire with no private pension at all.
The good news is that these gaps are narrowing, with pensions for women retiring in 2016 only 27 per cent lower than for men, compared with a massive 46 per cent difference in 2008. We are going the right way, but let us not delude ourselves that we are already in the right place.
As for the inequity between young and old and public and private sector workers, we still see voters drawn to the idea of the unsustainable triple lock and keeping state pension age down despite increasing longevity and costs, as well as supporting pay rises for public sector workers.
Perhaps this is genuine altruism from people who do not expect to ever benefit personally or, rather, it is a slightly naive hope for a better future for everyone equally.
Hugh Nolan is president of the Society of Pension Professionals
