Women who turn 65 today (November 6) will receive their state pension at the same time as men. But despite this parity, many in the industry have pointed out that women’s pensions remain far from equal to men’s.
Until 2010 women had received their state pension at the age of 60, and men at 65. However both women and men’s pension age will soon rise in tandem, to 66 by 2020 and then to 67 by 2028.
An influential review has suggested further increases to 68 by 2039.
The legislation to equalise men and women’s pensions was enacted in 1995, but changes in 2011, accelerated these increases and set in place these further rises to the state pension age. These changes were in response to increased longevity.
Fidelity’s investment director Maike Currie says: “The pension system is relatively equal if people follow the same working pattern from the age of 20 to retirement, but they don’t.
“Women are more likely to have fragmented careers, be self-employed or work flexibly during their working life as they continue to bear the brunt of the childcare or take a career break to care for sick or elderly relatives.”
Pension campaigner Ros Altmann adds that this problem is exacerbated by the fact that women typically have lower earnings, so their ability to save is reduced, while at the same time they tend to live longer than men.
She says:“There may be equal pension ages, but not pension equality. Women have always had lower pensions than men, leaving them at greater risk of later life poverty.”
The recent Cridland report estimated that in the first year of retirement women are expected to have 25 per cent less income than their male counterparts.
Altmann says government, employers and pension providers need to do more to address this “gender pension gap”.
She says: “More needs to be done to help women retain pension membership during maternity leave or childcare, encouraging employers or partners to contribute for them.”
She adds that the new auto-enrolment programme also disadvantages women, as anyone earning less than £10,000 a year is not automatically enrolled into a company pension. She points out that it is mainly women – often on part-time contracts – who make-up this group. Altmann has called for the government to remove this earnings limit.
In a similar way she says it is women, rather than men, that are typically caught by the “net pay trap” which means they may not get the full 25 per cent tax relief on pension contributions if their earnings are between £10,000 and £11,850.
She says the government urgently needs to remove the different tax treatments between different types of occupational pension scheme to address this issue.
“This is one of the largest injustices in pensions. Low earning women need most help to build up pensions, but are forced to pay so much more without knowing it.”
She also point out that final salary schemes – which pay higher pensions to those with longer service – do not always merge periods of pension service for women who have interrupted careers, but continue to work for the same employer. As a result they can get much lower pensions on retirement.
She adds: “Although women have made enormous strides pushing through glass ceilings in the workplace, the gender pensions gap remains wide and new barriers have been introduced. Urgent measures are needed to reduce women’s pensions disadvantage.”