Progress made in closing gender inequities in state pensions may be undermined if disparities between men and women employment DC pension benefits continue to increase, according to a new analysis from LCP.
The report titled ‘The Gender Pension Gap – How did we get here, and where are we going?’, includes a review of the research on gender pension gaps, the first detailed analysis of the DWP’s 2023 statistics on the gender gap in private pensions and new projections from LCP on the pensions that men and women will draw in future from the state, private sector DB and DC pensions.
It identifies six main sources of gender pension inequality, these are the gender pay gap, carer responsibilities that lower women’s pension status, longer life expectancy necessitating larger savings, unequal pension distribution following relationship breakdowns, automatic enrolment rules that disproportionately exclude women, and lower financial confidence in women’s investment decisions.
The gender pension gap among those who have recently retired has significantly decreased, according to an FOI reply received by LCP, with only a 2 per cent difference in state pensions between men and women in 2022–2023. Due to the new state pension’s gradual implementation beginning in 2016, full equality is predicted by the 2030s. However, the average DC pension income disparity between men and women is currently £25 per week and LCP predicts that it will rise to £30 per week by the mid-2040s.
LCP urges the government, employers, and pension industry to take steps to address this issue by continuing to publish statistics on the gender pension gap, promoting shared parenting and childcare support, and reviewing the pension inequality in cohabiting couples, taking into account divorce laws and post-breakup scenarios.
LCP partner Laura Myers says: “Our research suggests that there has been welcome progress in some aspects of the gender pension gap, notably the reduction in inequality in state pensions. But there is a real risk of a new generation of pension inequality if action is not taken.
“In a world of DC pensions in particular, pension outcomes hold up a mirror to inequalities in the workplace and the different labour market experience of men and women. Without concerted action by government, employers and the pensions industry to tackle these underlying causes, the gender pensions gap may be with us for decades to come”
Pensions Equity Group chair Kim Brown says: “Inequalities in pension outcomes need not be a permanent feature of the pensions landscape. This research shows that progress is possibly in reducing aspects of the gender pension gap, but important differences still remain.
“It is vital that government, employers and the pensions industry work together to tackle the multiple causes of pensions inequality. Only in this way can we make sure that all people can look forward to retirement with confidence”
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