More work needs to be done to tackle the gender pension gap

Sue Ferns · 8 March 2023

Today we are marking International Women’s Day in 2023 by returning to an issue we have been campaigning on for many years, the gender pension gap, writes Prospect senior deputy general secretary, Sue Ferns.

We have chosen International Women’s Day to launch our latest report on the gender pension gap. Our main finding is that the gender pension gap remains far too high, 40.5% for the latest year we have data (2020-21).

This represents an increase over earlier years, but it is difficult to draw conclusions about trends because the underlying data has been affected by COVID-19.

However, it is pretty easy to draw some conclusions about the level of the gender pension gap:

  • It is unacceptably high.
  • It represents an average shortfall of £7,100 in annual pension income for women.
  • It impacts women’s finances, quality of life and even health in numerous ways.

Pensions are deferred pay and gender gaps undermine fairness so on both these grounds the gender pension gap is clearly a trade union issue.

I want to share what we have been doing and what our future plans are, I hope you are inspired to join in and that collectively we can improve outcomes for members and women generally.

Official measure of the gender pension gap

In all our reports so far, our main recommendation has been that government should consult on a definition of the gender pension gap and publish official estimates of its size.

We emphasised this point in written and oral evidence to the Work and Pension Committee last year.

This may seem a fairly unambitious target, particularly as we have already produced an estimate of our own.

However, there is great power to producing an official estimate of the gender pension gap and designating it a National Statistic.

This would greatly increase the attention given to this problem and allow Parliament to hold government to account for its actions in tackling it.

Responding to the Work and Pension Committee’s inquiry, the new Pensions Minister indicated a willingness to take this forward which we warmly welcome.

We hope that progress on our goal of getting the government to publish an official measure of the gender pension gap will lead to practical actions to reduce it.

Recognition of caring in the pension system

To best way to reduce the gender pension gap is to tackle its biggest cause. This is the impact that caring responsibilities have on women’s retirement income.

Everyone knows about the gender pay gap, but in retirement this is exacerbated by the gaps in women’s pension records when they were not in paid work or working part-time due to caring.

Just as policies to tackle the gender pay gap will help reduce the gender pension gap, so will policies to deliver more affordable childcare and greater sharing of parental leave.

However, women are likely to undertake a disproportionate share of caring responsibilities for some time yet. This should not have negative financial consequences in retirement.

Raising young children is often a shared endeavour and there can be an understanding that the primary carer will be supported by their partner.

But what if the partner is unable or unwilling to provide that support if and when it is needed in retirement? Circumstances can change and people may not realise their financial vulnerability.

The proportion of adults who have never been married increased to 37.9% in England and Wales in 2021. Co-habiting partners have very few financial rights when relationships end.

Even people who are married or in civil partnerships may not always be able to enforce their rights. The proportion of divorces that involve a pension sharing order could be as low as 5%.

No wonder divorced women not cohabitating in their late 60s have less than 30% of the pension of equivalent men!

It’s not just about when relationships end. Increasingly workers have occupational pension schemes that do not automatically provide partner’s pensions and that can leave women exposed.

Obviously, it is important to try to strengthen people’s rights in the event of relationships ending and improve partner pension provision.

But there should also be better recognition of caring in the pension system. We are calling for additional state pension credits for carers.

We want people who are not in paid employment because of caring for young children (or long-term ill relatives) to get an additional £2 per week in state pension for every year of caring.

This would make up for the occupational pension income they would have received through automatic enrolment if they had stayed in paid employment.

What we should do now

As well as lobbying for government to acknowledge this problem and bring in policies to reduce it, we need to step up our own efforts with members and employers.

We are holding a webinar on 27 April for branch representatives to help them understand what practical things they can do to secure improvements for their members.

It is important that we tackle this issue at every level, so I would encourage all representatives to register for this.

We are also holding a webinar on 24 May to help members understand what they can do to mitigate the impact of the gender pension gap and protect their own income in retirement.

This will cover decisions members face at different stages during their careers. It is focussed on the gender pension gap but it is also relevant to men who are carers. You can register here.

Women’s TUC

After the launch of our report on the gender pension gap, our delegation will travel to Congress House for the Women’s TUC.

This year we are moving a motion about the interaction between the gender pension gap and pension issues affecting atypical workers.

This motion was inspired by the issues that freelance members, particularly in Bectu areas, were experiencing.

It is a good example of how Prospect and Bectu branches are learning from each other and how we all remain committed to highlighting and tackling this problem.

Download our report: Tackling the gender pension gap report 2022