Blog: Highlighting the gender pension gap
For this year’s International Women’s Day, organisations and individuals are being urged to #ChoosetoChallenge gender bias and inequality.
In response to this, Age Scotland is spotlighting the issue of pension inequality faced by women and the gender pension gap.
Historically, women have been disadvantaged by the pension system. While women tend to live for longer than men, they earn lower pay on average and are more likely to experience interrupted careers.
Before 1970, women could be barred from joining private pension schemes if they were married or only worked part-time. Women were also more likely to work in sectors where private pension schemes were less prevalent.
Additionally, arrangements at home and other caring responsibilities may mean they have not worked enough to qualify for full State Pension and restrict their opportunities for career progression.
Even today, women are often disadvantaged by contributory pension models as they may work fewer hours and earn lower pay. Many women may even be forced into taking an early (and underfunded) retirement due to the impact of the COVID-19 pandemic on their employment prospects. As we know from the 1950’s born women who were impacted by State Pension Age changes, having to change retirement plans with little notice can have a devastating impact on people’s lives.
For 2018-19, the gender pension gap – the difference in pension for female pensioners compared to male pensioners – was estimated to be 40.3%. This is more than twice the size of the gender pay gap (17.3%) – which itself directly contributes to the gender pension gap.
Divorce can also negatively impact the size of women’s pension pots, as pension funds are not necessarily included in divorce settlements. Research suggests divorced women’s pension pots may only be worth around one third of divorced men’s pension pots – on average, £9,000 compared with £30,000.
The UK Government’s auto-enrolment scheme for workplace pensions will doubtless be a good start for many employees. However, the requirement to earn at least £10,000 per year to be entered into a scheme means some women are still excluded, as they are more likely to be in lower-paid and part-time jobs. In 2019, it was suggested that over three quarters of employees falling below the £10,000 threshold were women.
Older women with low State Pensions and who do not have any other income could be entitled to – but may be missing out – on a range of financial support, including Pension Credit.
Pension Credit is one of the most underclaimed benefits, and an estimated 40% of eligible people are not claiming it. In Scotland, this is the equivalent of 123,000 eligible older households who are missing out – meaning there is £300m of benefits left unclaimed.
Of those that are claiming Pension Credit, nearly two thirds (64%) are women.
Claiming Pension Credit is important as it passports the recipient to other forms of financial support to enable them to live well – such as Housing Benefit, Council Tax Reduction, Cold Weather Payments and additional help with health costs.
Later this month, Age Scotland will be launching a year-long benefits uptake campaign to address to low uptake of a range of benefits among older people in Scotland. To kick-off, we are highlighting the underclaiming of Pension Credit.
