Autumn Budget 2021: Pensions and gender

Currently, female pensioners receive on average 16% less state pension than men. UK state pensions are among the least generous in the world: for anyone who retired before the pension rules changed in April 2016, the Basic State Pension is nearly £40 per week less than the government’s own poverty threshold (the level at which single-rate Pension Credit is set). Because legacy rules treated married women as dependent on their husbands, older retired women in particular are less likely than men to receive the full amount. 13% of pensioners overall, and 20% of single female pensioners, live in poverty.

State pensions have become more inclusive for those who take family caring breaks and are also redistributive, but there is a sharp divide between the experience of existing and future pensioners. The new Single Tier Pension is just above the single rate of Pension Credit, but due to transitional rules, it will be decades before women generally receive as much state pension as men.

“Women have barely a quarter of the private pension wealth of men.”

However, it is private pension schemes, promoted and subsidised by UK governments, that are the main reason for the gender gap in pensions. Private pensions favour those with continuous full-time employment and high lifetime earnings. Auto-enrolled private pensions exclude low-paid employees and, like other private pensions, make no allowance for periods of caring. Women’s domestic roles are crucial to their pension disadvantage: women aged 65 to 74 have one-seventh of the private pension wealth of men.

• Among those aged 60 to 64, nearly two-thirds of women have no private pension wealth.
• Among those aged 65 to 74, median private pension wealth is £182,400 for men and £25,000 for women.
• Among the population as a whole, women’s median pension wealth is £6,000, barely a quarter of the £22,600 held by men.

The Women’s Budget Group is calling for: a tax-funded Citizens Pension, payable to each pensioner at around the Minimum Income Standard; a Voluntary Earnings-related State Pension Addition (VESPA – an auto-enrolled option that is fully portable and allows carer credits); and a Family Carer Top-up in auto-enrolled pension schemes.

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