Pension forms a significant part of the income people receive post-retirement. For many, the state pension is the only form of income, while others may have supplementary sources owing to their employment and other factors. In all cases, pension determines the quality of post-retirement life to a large extent.
Pension Disparity Between Men and Women
Retirement is a challenging phase for everyone, irrespective of their gender. Both men and women adjust to not working anymore and limited sources of income. However, women face certain unique issues after retirement. The problems are related to lower earnings, higher life expectancy, lower confidence about personal finances, and less aggressive investing.
The wide gap between the pension benefits for men and women add to the already existing challenges of women. The gender pension gap is real and palpable. The pension balances of women in the UK are at least 30% – 40% less than those of men. The pension pot of an average woman at the age of 65 in the UK is £35,800, only one-fifth of that of the same-age man in the country.
As a result, women have higher chances of facing pension poverty after retirement compared to men. The women pension deficit or the gender pension gap can be attributed to the social and cultural norms associated with women in the society and lack of , augmented by the historical policy and legal systems in the UK.
Challenges Related to State Pension
Millions of women in the UK have been adversely impacted by the change in their state pension age. The state pension age started at 65 for men and 60 for women in 1948. However, with time, the government has made several amendments to the state pension age for women to bring more parity and reduce its expenses. As a consequence, the and is set to move up to 66 by October 2020.
The change in age came as a shock to many women, especially those closer to their retirement age of 60. They suddenly had to adjust to the idea of working for more years and start receiving their pension at a later age. Over 3.8 million women got affected, with many losing more than £40,000 due to the change.
Furthermore, women have also faced the monetary consequences of technical blunders at the hands of the Department for Work and Pensions (DWP). Under the old state pension systems, women received only 60% of their basic state pension rate, depending on their husbands’ contributions. The process was later changed in 2008, and the uplift could be claimed, but it was not communicated clearly to women. As a result, millions of women missed out on their marriage uplift payment of £10,000 or more each for 12 years!
Challenges with Private Pension
Women are at an equal disadvantage with reference to the private pension. Women, as a gender, are . The imbalance affects not only their personal life but also their private pension savings. They usually have career breaks, low pay, contract work, part-time work, or informal careers leading to a lower private pension. The lifetime average earnings of men in the UK are approximately 80% more than women. The low income also prevents women from the new auto-enrolment pensions eligibility of £10,000 annually.
Thus, the lack of support system for women in the family structure and low recognition of their caregiving duties have added on to the troubles women face post-retirement. They work longer years, earn less, take care of the family, and yet do not have sufficient pension income at the age of retirement. Although a lot of progress is being made in narrowing the gender pension gap, women continue to bear the deficit and its implications.