It has long been known that women face a smaller pension pot than men. WASPI (Women against state pension inequality) a voluntary organisation in the UK has been tirelessly campaigning and highlighting the gender pension gap since 1995.
WASPI have also been campaigning for women born in 1950’s who were not adequately notified that their state pension age was increasing from 60 to 65 with many women receiving less than 1 years notice which left them with inadequate time to prepare of retirement. They relentlessly lobbied government and encouraged women affected by the changes to pensions legislation to complain to the Parliamentary and Health Service Ombudsman. An investigation was launched with the first stage findings being published this year in April 2022. The Ombudsman reported:
“We have found that between 1995 and 2004, DWP’s communication of changes to State Pension age reflected the standards we would expect it to meet.
But in 2005, DWP failed to make a reasonable decision about targeting information to the women affected by these changes. That was maladministration.
In 2006, DWP proposed writing to women individually to tell them about changes to State Pension age but it failed to act promptly. That was also maladministration”.
The findings recognised that there had been several occasions of maladministration within the Department of work and pensions regarding the communication of the legislative change to pensions. It has now become WISPI’s objective to campaign for adequate compensation for these women.
However, this is not the only detriment that women have experienced regarding pensions in comparison to men. According to the Pension Policy Institute there is no doubt that a gender pension gap exists in the UK. This is due to a number of reasons; private pension pots of women are notably smaller. Automatic enrolment in workplace pension schemes do not consider that women are more likely to have a reduced number of years with full pension contributions due to career breaks or working part time hours to enable care of children or family members. This means men are more likely to have more years of full pension contributions than women making their pension pots on average 3 times larger. The Average 60-year-old woman has roughly £51,000 in her pension savings compared to £156,500 for a man of the same age.
Divorced women are notably worse off with £26,100 saved, whereas a divorced man still manages to save £103,500 towards his pension. Reasons for this could be that paid childcare can reduce a woman’s affordability of contributions with some opting out of employer contribution schemes altogether. Affordability is exacerbated when income in a single parent household is reduced further by things like career breaks and part time working due to caring responsibilities.
Research by The Pension Policy Institute (2019) has stated that 1.2 million women who are in their 50’s have no private pension at all. They estimate that women will need to save between 5-7% more than men in order to close the private pension gap.
In regard to state pensions there is also a gap created by much the same reasons as stated previously. State pension entitlement is determined by an individuals National Insurance record built up via employment. A research briefing on Women and pensions (parliament.uk) to the house of commons in 2018 noted that whilst women in work had increased over recent decades, the rate of women in employment is still lower than that of men. The gender pay gap, caring responsibilities and life expectancy of women were all offered as contributing factors to the reason that women’s state pensions remain lower than men. The pension shortfall for women has decreased after home responsibilities protections to the old contributory state pension were introduced. This made provisions for women to claim National Insurance credits when not in work due to carer responsibilities and reduced the number of years of full contributions needed to receive a full state pension. However, despite these mitigations it is estimated that women will not receive equal state pension status to men until 2040. According to the research In February 2018, the average weekly amount received of State Pension by women was 82% that of the average for men. For recipients of the new State Pension, the difference is small: women’s average amounts under the new system were 95% of those for men.
All in all, women continue to receive smaller pension income than men. In order to increase women’s ability to put more into their pension pots the mitigating factors need to be tackled by the government. Affordable childcare would increase women’s ability to fund a private pension and increase their ability to work longer hours. The threshold for employer auto enrolment could also be lowered to capture more part time working women. Whilst better education and communication surrounding the benefits of private pensions to lessen the risk of women opting out of private pension schemes.
To read more about WASPI and their work campaigning for women’s equal rights to pension click here
By: Rosemary Holmes
Bold Women Blogging is a public submission blog. Posts do not necessarily represent the views of WRDA but rather operates as a platform for open discussion to encourage women’s participation in social and political issues. To find out more visit this page.