Article originally published on the World Economic Forum’s Agenda on September 27, 2021.
The gender pension gap exists in virtually every retirement income system around the world. The range is remarkable with Japan having an almost 50% gap whereas Estonia’s gap is less than 5%. In today’s values, on an average this wage gap can represent $8,400 per year in the US and £6,000 per year in the UK.
The following graph shows the gender pension gap for most OECD countries:
There is a direct relationship between the pensions arising from occupational pension schemes and employment patterns. Women’s pensions are lower for the following reasons:
There are several design features that aggravate the gender pension gap which include:
The following adversely impact because of longer life expectancy of women:
Characteristics within many societies and cultures aggravate the pension gap. These include:
Given the variety of causes and compounding effects of the gender pension gap, there is no single solution. Rather, this pressing issue needs to be tackled from several perspectives and by multiple stakeholders.
Bear in mind that it takes a lifetime of saving to finance a pension. For those already in later life therefore, there will be some serious catch up to do.
Here are the key calls to action for relevant stakeholders:
|Short-term actions||HR leaders||Pension leaders||Women themselves||Governments|
|Easy wins||Enable more flexible working arrangements and more sharing of parental leave.||Remove eligibility thresholds and restrictions from pension plans so low earners and part timers can join.||Don’t go into denial on financial matters. Be interested in your money and make it work harder.||Enact enabling legislation to make all jobs flexible. Improve pay rates for low income roles.|
|Introduce targeted financial wellness seminars. Include the small actions women can take now such as sharing child-rearing costs.||Pay contributions for paid parental leave and carers leave.||Lobby for and attend financial education seminars. Ask for support with financial advice. Investments benefit by growth over time, so get moving – don’t wait too long.||Improve and expand affordable and appropriate childcare options.|
|Strategic decisions||Remediate gender pay gaps – this is one of the most important things you can do.||Introduce unisex rates on annuities, make sure survivors benefits are built in and index all pensions.||Discuss savings, expenditure and pension arrangements with your partner. Ensure you have scope to save for your own pension.||Introduce catch up provisions for pension contributions to fill career gaps.|
|Remediate career differentials that lead to pay gaps.||Ensure that communications contain the best language to engage women.||Improve health factors that will affect your healthy life expectancy.||Ensure pension rights form part of divorce proceedings.|
|Introduce personalized models to show impact of different working arrangements and career gaps on pay and pensions.||Create greater awareness of the implications of divorce on pensions.||Ensure your job role is on the growth trajectory. For example, P&L roles, customer-facing and supervisory roles tend to have higher promotion rates.||Introduce pension credits for carers.|