The gender disparities in pension systems

The pensions landscape reflects the inequality within society, with the gender pension gap presenting significant consequences for retirement outcomes.

Two-thirds of pensioners living in poverty are women. This gap is informed by issues ranging from the domestic sphere to the gender pay gap. The gender pension gap is a systemic and ideological issue exacerbated by labour market inequalities and gendered divisions of labour.

‘Singleness’ has a major impact on retirement outcomes, too: half of pensioners in poverty are single women. Being a single mother during working life exacerbates this effect.

Acknowledging the unique challenges parents face is key to addressing this issue effectively.

Parenting and the gender pension gap

Women with children face the motherhood penalty – namely, economic and hiring disadvantages because of perceived instability due to caring responsibilities.

For single mothers, there is a cumulative effect of both ‘singleness’ and the motherhood penalty. Single mothers earn 37% less than the average woman, and 53% less than the average man, creating less earnings to contribute to a pension. It is also worth noting that women carry out 60% more unpaid labour than men – much of which is attributable to caregiving.

To address the intersectionality between singleness and caregiving responsibilities effectively, it is important to consider how supporting single mothers can alleviate financial disadvantages.

Periods spent out of the workforce due to caregiving responsibilities often go uncompensated in workplace pensions, creating gaps in retirement savings. If we were to address these gaps, it would help ensure unpaid labour is recognised.

Although flexible job options exist, women may struggle to find positions that best utilise their skill set, often sacrificing pay or other factors. Flexible working conditions can help balance these demands, but can also result in lower earnings and, consequently, lower pension contributions.

The current benefits system does not fully account for the working-life barriers to saving that many encounter. It may be possible to build more targeted support into the system to help those who balance work and childcare responsibilities.

Systemic changes are necessary to ensure better financial outcomes in retirement. Exploring alternative routes such as household contributions could help compensate for the lack of access to saving opportunities.

Ethnicity and the gender pension gap

Ethnicity also factors into the disparities presented by the gender pension gap.

Ethnic minority groups are more likely to be self-employed or work part-time, research has shown. For example, Pakistani and Bangladeshi women have the highest rates of part-time employment at 46%, according to government data, making these groups less likely to be eligible for automatic enrolment.

Research by Scottish Widows in its Women and Retirement Report showed that Asian women are 22% more likely than white women to reduce working hours instead of fully retiring, while black women are 30% more likely. In addition, 14% of black women and 15% of Asian women are opting out of paying into a pension pot, compared to 5% of white women.

The data also showed that 16% of black women and 20% of Asian women work more than one job, compared to 9% of white women. Juggling multiple jobs or working part-time makes it challenging to contribute consistently to traditional pension plans.

Irregular working patterns expose a significant gap in pension schemes, which do not adequately accommodate such employment situations. Moreover, persistent workplace discrimination affects earning potential and ability to save for retirement, highlighting the need for stronger enforcement of anti-discrimination laws to ensure fair treatment and equal opportunities for career advancement.

Disability and the gender pension gap

Disabled women face the biggest gap, data shows. The pay disparity between disabled women and non-disabled women varies considerably, ranging from 4.3% to 18.9% depending on the type of disability, according to research from Close The Gap.

This disparity has profound implications for pension outcomes. Current workplace policies often lack inclusivity and equal opportunities, with many employers not regularly conducting pay audits or taking action to ensure fair compensation practices.

Furthermore, there is a shortage of flexible working arrangements, reasonable accommodations, and accessible training and development programmes, which are crucial for helping disabled women balance work and personal needs.

Persistent stigma and discrimination in the workplace prevent disabled women from being valued and fairly compensated for their contributions, further hindering financial security in retirement.

A multi-faceted solution

The disparities facing women in the pensions landscape are caused by an array of socio-cultural and political legislative factors, a multi-faceted approach would be required to tackle the complexities of the issue.

The current landscape of working culture is not adequately serving those with needs of non-traditional work patterns and responsibilities within the domestic sphere.

Alongside these socio-cultural factors, interventions are needed to address economic labour inequalities and gaps in systems such as automatic enrolment, to ensure adequate and equitable retirement outcomes.

Rosa Wright and Bethel Kyeza are interns at the Pensions Policy Institute, employed through the 10,000 Interns Foundation.