Government-backed Pensions Commission calls for action on gender savings gap | Pensions
A revitalized Pensions Commission will tell ministers that any change to British pensions must include measures to close the gap in retirement savings between men and women.
According to the government-supported organization, the private pension savings of women approaching retirement are on average half of those of men; the average retirement wealth is £81,000 compared to £156,000.
The commission, which is expected to publish its interim report on the long-term future of the pension system this week, said it would look at how the government could reduce the gender pension gap as part of its work towards a final report with recommendations expected to be presented next year.
He said closing the gender gap in private pension wealth was “not only a matter of fairness” but that failing to do so risked increasing pensioner poverty and damaging government finances.
The Pensions Commission, first established under Tony Blair’s government in 2002, was revived by Keir Starmer last year amid fears that a crisis in saving for retirement could mean today’s workers will be poorer in later life than current retirees.
The relaunched commission is chaired by Jeannie Drake, a member of the original Blair-era panel who is working alongside Ian Cheshire, former chairman of Barclays UK, and Nick Pearce, professor of public policy at the University of Bath.
The interim report will be based on data produced by the Institute for Fiscal Studies, which says women suffer a “motherhood penalty” because their pension contributions often remain flat after giving birth.
The IFS found that women contribute an average of around £30 a week to the pension before giving birth to their first child; this level remained unchanged six years later.
But savings rates for men have risen from around £30 a week to an average of over £60 a week over the same period.
Women are also more likely to work part-time or leave work altogether due to caring responsibilities; This excludes them from automatic participation in workplace pension schemes.
The commission said Britain had the second-worst gender pension gap among rich countries in the 38-member Organization for Economic Co-operation and Development, behind Japan, despite state pension outcomes for men and women reaching retirement age in 2026 being almost equal.
He said solutions would require a “joined approach” that included reforms to pension policy and the labor market, including access to childcare.
Lady Drake said: “The evidence is clear. Women are approaching retirement with half the pension wealth of men and this gap will continue unless further action is taken.”
“The gender pension gap is not just a reflection of the pay gap; it is shaped by a system that has not yet fully taken into account the realities of many women’s working lives, including career breaks due to care, part-time work and the motherhood penalty we have identified.
“As this commission moves towards recommending solutions, it will examine pension policy measures that could help reduce the gap, which I believe employers, pension providers and policymakers should work on together.”
