Union Prospect has rebuked the government for its record on tackling the glaring gap in pensions wealth between women and men. Prospect wants to see a recognised official measure and annual parliamentary debate on the figures, as well as making it an equality objective for the DWP, which would have to monitor progress. 

 

The gender pensions gap, a multiple of the pay gap, “is not even on the agenda in the way it should be now”, the senior deputy general secretary of Prospect, Sue Fearns, told the Work and Pensions Committee on Wednesday. 

 

Labour market inequalities, a lack of financial support for carers and the very low uptake of pension sharing on divorce were singled out as contributing factors, but those giving evidence to the committee agreed there were things that could be done within pensions to improve women’s position. 

 

She said the same should be done for other underpensioned groups – such as disabled people and ethnic minorities, as inequality is intersectional, but the union is starting with gender because work on the underpensioned is still in the first phase. 

 

“One of the first things we’d like to see is a government definition of the gender pensions gap, or pensions gap, which becomes an official definition; this would allow greater focus on it,” Fearns said. 

 

She argued that mandatory gender pay gap reporting had focused minds on how to address the matter. The gender pay gap among full-time employees in the UK increased between 2020 and 2021 from 7% to 7.9%, but the Office for National Statistics speaks of a “downward trend” overall. The Institute for Fiscal Studies has produced research showing that most of the reductions in the pay gap are however attributable to the fact that women as a group are better educated than in the past, while like for like, the gap has only reduced by 3% in 25 years; the average working-age woman in the UK earned 40% less than her male counterpart in 2019.
 

 

Fearns argued that “what gets measured gets managed”, believing that measuring the gender pensions gap would lead to monitoring and proposals to address the gap. Such annual statistics could also pave the way for ethnicity gap reporting in pensions, she suggested. 

 

“It should be one of the DWP’s equality objectives to not only measure it but monitor progress and be clear about what action is needed to address the gender pension gap,” Fearns said, adding: “It would be good if it was reported annually to parliament so there was a debate... on tackling it. We’d like to see that put on a statutory basis.” 

 

Solutions to the gender pensions gap don’t all lie in the pensions system, as many stem from labour market inequalities, she acknowledged, "but there are steps that could be taken in the pension system". 

 

Parliamentary time is being spent on issues like GMPs to allow schemes to equalise small amounts for women and men, but unless forced to do otherwise by the judiciary, the government seems to prefer a light touch approach to the gender pensions gap. Last month, pensions minister Guy Opperman declined to acknowledge that the gap needed special measures to address it, arguing that auto-enrolment was the best mechanism to help women save more. 

 

    

The unequal share of the care burden is a key factor to pensions inequality for women, said Sophia Dimitriadis, a senior economist at the International Longevity Centre; those working part-time or taking career breaks being more at risk, and particularly women who have taken a career break and subsequently divorce. 

 

Many are also “psychologically constrained”, she said; they have “overwhelming multiple priorities, particularly women with children”, meaning that “nudging or defaulting is probably needed”. 

 

Solutions related to supporting carers to be able to work would be key, she argued. “We have called for all employers to make all jobs flexible by default,” said Dimitriadis, and to introduce 10 days of paid and six months of unpaid carer’s leave. This should be available not only to parents but to all carers, she stressed, noting that other countries already have this in place. 

 

Within auto-enrolment, the reforms due to be brought in as part of the Automatic Enrolment Review 2017 would also help, the speakers agreed. Lowering the threshold would be welcome, but in addition, ILC wants to see ‘sidecar’ schemes – where savings are first made into a savings account before ‘overflowing’ into pensions – to support low earners. 

 

Nigel Stanley, who chair’s the members’ panel at master trust Nest, said there was an assumption that if people are not earning very much at one point in time, this will continue for the rest of their lives – and that therefore they should not be saving because they might ‘oversave’ compared with their replacement ratio, when the state pension already largely replaces low incomes. 

 

This assumption is misguided, Stanley said, suggesting this was particularly so for women: "That’s actually not true for a lot of people; they might have a period of part-time work where they are under the earnings threshold, not building up any pension, and then later when their children are grown up... they may well go back to full-time work but missed out on a significant chunk of contributions.” These missed contributions would otherwise be growing and compounding over time, improving women’s pensions. 

 

Divorce is another factor that can leave women poorer in retirement. Although there is a mechanism that allows for pension sharing, most people forget about pensions in divorce settlement, believing the house to be the single biggest asset, said Christopher Brooks, head of policy at charity Age UK. 

Considering the low take-up of pension sharing on divorce, he said there should be a nudge system in place so people are pushed to consider it. “Definitely reforms can be made to make it fairer,” Brooks added.